TDG

It has been about a month since the last earnings report for TransDigm Group (TDG). Shares have lost about 8.1% in that time frame, underperforming the S&P 500. Will the recent negative trend continue leading up to its next earnings release, or is TransDigm due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for Transdigm Group Incorporated before we dive into how investors and analysts have reacted as of late. TransDigm's Q3 Earnings Surpass Estimates, Sales Increase Y/YTransDigm Group Incorporated reported third-quarter fiscal 2026 adjusted earnings of $10.87 per share, which topped the Zacks Consensus Estimate of $10.29 by 5.6%. The bottom line also improved 13% from the prior-year quarter’s figure of $9.60.The company reported GAAP earnings of $9.39 per share compared with $8.47 in the year-ago quarter. Sales rose 23% to $2.74 billion and beat the consensus estimate of $2.65 billion by 2.6%. Organic sales growth was 13%, supported by double-digit gains across all three major aerospace market channels. Gross profit increased 22.2% year over year to $1.63 billion. The gross margin was 59.4%, slightly below 59.5% in the prior-year quarter.Selling and administrative expenses rose to $332 million from $242 million. These expenses represented 12.1% of sales compared with 10.8% a year earlier. Net interest expense increased 29.5% to $514 million, reflecting interest on debt raised by the company.EBITDA As Defined rose 18.9% to $1.45 billion. However, the related margin contracted to 52.8% from 54.4%, partly reflecting acquisition dilution. Management noted that the base businesses expanded margins year over year after excluding that dilution. GAAP net income increased 9.5% to $540 million, while reported earnings rose to $9.39 per share from $8.47. TransDigm completed the acquisitions of Jet Parts Engineering and Victor Sierra in April 2026 for approximately $2.2 billion in cash. The businesses expand the company’s exposure to proprietary aerospace aftermarket parts and repair solutions.After the quarter ended, TDG agreed to acquire Prince & Izant for approximately $1.07 billion in cash, including certain tax benefits. The company expects the business to strengthen its position in aerospace and defense, aeroderivative turbine and transportation markets.TDG also repurchased 809,101 shares during the quarter at an average price of $1,208 per share, returning $1 billion to shareholders. Fiscal year-to-date repurchases totaled $1.8 billion for nearly 1.5 million shares. Cash and cash equivalents as of June 27, 2026, amounted to $2.77 billion, down from $2.81 billion recorded as of Sept. 30, 2025.Total debt was $33.71 billion, while net debt was $30.93 billion. The company reported a total net leverage ratio of 5.8 times. About 75% of gross debt was hedged or fixed through fiscal 2029 using interest-rate caps, swaps and collars, limiting near-term exposure to variable-rate increases.Net cash provided by operating activities for the first 39 weeks of fiscal 2026 increased to $1.69 billion from $1.53 billion. Management raised fiscal 2026 guidance after bookings exceeded expectations and operating momentum remained strong. The updated outlook excludes contributions from the pending Prince & Izant acquisition.Net sales are now projected to be between $10.47 billion and $10.55 billion, up $150 million at the midpoint from the prior forecast. EBITDA As Defined is expected to be in the range of $5.49 billion to $5.55 billion, representing a $100 million midpoint increase. The Zacks Consensus Estimate is pegged at $10.36 billion, which is lower than the company’s newly guided range.Adjusted earnings are forecasted to be between $40.62 and $41.46 per share compared with the previous range of $38.83-$40.21. The Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $39.96 per share, lower than the company’s revised guidance. It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 5.27% due to these changes. At this time, TransDigm has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a score of D on the value side, putting it in the bottom 40% for this investment strategy. Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise TransDigm has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Transdigm Group Incorporated (TDG) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

HEICO Corporation HEI posted third-quarter fiscal 2026 earnings of $1.67 per share, which beat the Zacks Consensus Estimate of $1.51 by 10.6%. The bottom line also improved 32.5% from the year-ago quarter’s $1.26. Quarterly net sales came in at $1.41 billion, which rose 23.1% year over year and surpassed the consensus mark of $1.35 billion by 4.9%. Results were driven by consolidated organic net sales growth of 14% and contributions from acquisitions. Heico Corporation price-consensus-eps-surprise-chart | Heico Corporation Quote HEICO’s cost of sales increased 20.5% year over year to $832 million. The company’s selling, general and administrative (SG&A) expenses rose 17.5% to $225.8 million. Interest expense climbed 13.3% to $35.9 million from $31.7 million in the year-ago quarter. Operating income jumped 34% year over year to $355.2 million, and consolidated operating margin expanded to 25.1% from 23.1% in the prior-year period.HEI delivered record quarterly net income of $235.4 million, up 32.8% year over year. Flight Support Group: Net sales from this segment rose 18% year over year to $947.8 million. Growth was led by robust organic expansion of 12%, supported by improved demand across the group’s product lines as well as the impact of fiscal 2026 acquisitions.The segment’s operating income increased 24% year over year to $245.3 million, and operating margin improved to 25.9% from 24.7%, helped by a more favorable product mix and efficiencies in SG&A expenses.Electronic Technologies Group: The segment’s net sales climbed 36% to $483.5 million. The increase reflected organic growth of 18% plus contributions from acquisitions completed in fiscal 2025 and fiscal 2026, with demand improving across several end markets.The segment’s operating income rose 55% year over year to $125.6 million, and operating margin expanded to 26% from 22.8%, driven by net sales growth, improved gross profit margin and better SG&A leverage. As of July 31, 2026, HEI’s cash and cash equivalents totaled $241 million compared with $217.8 million as of Oct. 31, 2025.Cash flow provided by operating activities was $815.9 million during the first nine months of fiscal 2026, reflecting a rise of 27.7% from the prior-year period’s level.HEICO reported a long-term debt (net of current maturities) of $2.54 billion as of July 31, 2026, up from $2.16 billion as of Oct. 31, 2025. HEICO currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Teledyne Technologies Inc. TDY reported second-quarter 2026 adjusted earnings of $6.28 per share, which surpassed the Zacks Consensus Estimate of $5.78 by 8.7%. The bottom line also improved 20.8% from $5.20 recorded in the year-ago quarter.Total sales were $1.66 billion, which beat the Zacks Consensus Estimate of $1.57 billion by 5.9%. The top line also jumped 9.8% from $1.51 billion reported in the year-ago quarter. Kratos Defense & Security Solutions, Inc. KTOS reported second-quarter 2026 adjusted earnings of 21 cents per share, which beat the Zacks Consensus Estimate of 13 cents by 61.5%. The bottom line also increased 90.9% from the year-ago quarter’s 11 cents.Revenues of $458.8 million outpaced the consensus estimate of $412 million by 11.4% and increased 30.5% year over year. TransDigm Group Incorporated TDG reported third-quarter fiscal 2026 adjusted earnings of $10.87 per share, which topped the Zacks Consensus Estimate of $10.29 by 5.6%. The bottom line also improved 13% from the prior-year quarter’s figure of $9.60.Sales rose 23% to $2.74 billion and beat the consensus estimate of $2.65 billion by 2.6%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Heico Corporation (HEI) : Free Stock Analysis Report Transdigm Group Incorporated (TDG) : Free Stock Analysis Report Teledyne Technologies Incorporated (TDY) : Free Stock Analysis Report Kratos Defense & Security Solutions, Inc. (KTOS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

HEICO Corporation HEI is scheduled to release third-quarter fiscal 2026 results on Aug. 25, after market close. The company delivered an earnings surprise of 24.81% in the last reported quarter.Let’s discuss the factors that are likely to be reflected in the upcoming quarterly results. In June 2026, HEICO acquired a 90% stake in CalRamic Technologies, a manufacturer of high-voltage ceramic capacitors, and an 80% stake in Cook Defense Systems, a supplier of armored vehicle track systems. The acquisitions are likely to have supported growth by expanding HEICO’s aerospace and defense portfolio, strengthening aftermarket capabilities and adding new revenue opportunities.Strong sales growth across product lines, led by aftermarket parts and distribution operations, along with contributions from prior acquisitions, is likely to have supported the Flight Support Group unit’s fiscal third-quarter top line.Healthy sales growth across aerospace, defense and electronics products is likely to have boosted the Electronic Technologies unit’s revenues in the quarter under review. The Zacks Consensus Estimate for HEI’s fiscal third-quarter sales is pegged at $1.34 billion, which indicates an increase of 17% from the prior-year figure.The consensus estimate for HEI’s fiscal third-quarter earnings is pegged at $1.51 per share, which indicates year-over-year growth of 19.8%. Our proven model predicts an earnings beat for HEICO this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here, as you will see below. Heico Corporation price-eps-surprise | Heico Corporation Quote Earnings ESP of HEICO: The company’s Earnings ESP is +3.20%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.HEI’s Zacks Rank: Currently, the company has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here. TransDigm Group Incorporated TDG reported third-quarter fiscal 2026 adjusted earnings of $10.87 per share, which topped the Zacks Consensus Estimate of $10.29 by 5.6%. The bottom line also improved 13% from the prior-year quarter’s figure of $9.60.Sales rose 23% to $2.74 billion and beat the consensus estimate of $2.65 billion by 2.6%.Teledyne Technologies Inc. TDY reported second-quarter 2026 adjusted earnings of $6.28 per share, which surpassed the Zacks Consensus Estimate of $5.78 by 8.7%. The bottom line also improved 20.8% from $5.20 recorded in the year-ago quarter.Total sales were $1.66 billion, which beat the Zacks Consensus Estimate of $1.57 billion by 5.9%. The top line also jumped 9.8% from $1.51 billion reported in the year-ago quarter.Hexcel Corporation HXL reported second-quarter 2026 adjusted earnings of 66 cents per share, which improved 32% from the year-ago quarter’s figure of 50 cents. The bottom line also surpassed the Zacks Consensus Estimate of 56 cents by 17.9%.The company’s net sales totaled $529.3 million, which beat the Zacks Consensus Estimate of $522 million by 1.5%. The top line also witnessed an improvement of 8% from the year-ago quarter’s figure of $489.9 million. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Heico Corporation (HEI) : Free Stock Analysis Report Transdigm Group Incorporated (TDG) : Free Stock Analysis Report Hexcel Corporation (HXL) : Free Stock Analysis Report Teledyne Technologies Incorporated (TDY) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

TransDigm’s second quarter performance reflected broad-based growth across its commercial OEM, commercial aftermarket, and defense segments, with management highlighting particularly strong demand in the commercial transport aftermarket. CEO Michael Lisman credited the 18% year-over-year growth in commercial aftermarket to robust demand across engines, interiors, and passenger systems, despite ongoing geopolitical uncertainties. The company also reported double-digit growth in defense and commercial OEM markets, which management attributed to increased production rates at Boeing and Airbus and continued backlog expansion. Is now the time to buy TDG? Find out in our full research report (it’s free). Revenue: $2.74 billion vs analyst estimates of $2.67 billion (22.5% year-on-year growth, 2.5% beat) Adjusted EPS: $10.87 vs analyst estimates of $10.30 (5.5% beat) Adjusted EBITDA: $1.45 billion vs analyst estimates of $1.39 billion (52.8% margin, 3.8% beat) The company lifted its revenue guidance for the full year to $10.51 billion at the midpoint from $10.36 billion, a 1.4% increase Management raised its full-year Adjusted EPS guidance to $41.04 at the midpoint, a 3.8% increase EBITDA guidance for the full year is $5.52 billion at the midpoint, above analyst estimates of $5.43 billion Operating Margin: 44.8%, down from 46.4% in the same quarter last year Organic Revenue rose 13% year on year (beat) Market Capitalization: $67.63 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Robert Stallard (Vertical Research): Asked about potential impacts from "right to repair" defense legislation. Co-COO Patrick Murphy said the bill is still evolving and its effects on TransDigm are unclear until finalized. Kenneth Herbert (RBC Capital Markets): Inquired if the failed Stellant deal affects future defense M&A appetite. CEO Michael Lisman emphasized it was a unique situation and does not alter the company’s M&A strategy, highlighting continued activity in both commercial and defense pipelines. Gavin Parsons (UBS): Queried about the disconnect between aftermarket growth and underlying flight activity. Murphy explained their backlog provides short-term visibility but acknowledged that trends could change, noting, “one quarter is really hard for us to predict 3, 4 quarters out.” David Strauss (Wells Fargo): Sought clarification on margin expectations for Q4 amid recent acquisitions. CFO Sarah Wynne said some conservatism is built into guidance due to dilution from new acquisitions, but core margin improvement remains a priority. Sheila Kahyaoglu (Jefferies): Asked about sub-segment drivers within commercial aftermarket. Murphy noted broad-based strength, particularly in engine and passenger systems, while interiors remained solid and freight was stable. In the coming quarters, the StockStory team will monitor (1) the integration progress and revenue contributions from recent and pending acquisitions like Jet Parts, Victor Sierra, and Prince & Izant; (2) sustained commercial OEM and aftermarket growth as aircraft production and flight activity trends evolve; and (3) developments on regulatory issues such as right to repair, which could affect defense aftermarket dynamics. Continued margin performance and capital deployment strategy will also be key signposts. TransDigm currently trades at $1,226, down from $1,286 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members). WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses. But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.

TransDigm Group (NYSE:TDG) reported fiscal third quarter results on August 4, with net sales climbing 23% to $2,741 million and adjusted EPS up 13% to $10.87. Management raised full-year guidance on the back of that momentum. Yet in the days that followed, the stock kept sliding. For a company built on relentless growth, that gap between the numbers and the share price is worth digging into. Every major channel grew by double digits in the quarter ended June 27. Commercial aftermarket sales rose 17%; commercial OEM benefited as aircraft manufacturers lifted production; and defense notched another quarter of steady growth while building backlog. That breadth pushed EBITDA As Defined up 19% to $1,447 million and gave management enough confidence to raise its full-year outlook, lifting the midpoint of adjusted EPS guidance by $1.52 to a new range of $40.62 to $41.46. The bigger picture stretches back further. TransDigm started in 1993 with just $25 million in starting capital and never raised additional equity, yet it has grown into a $69 billion company. The stock's IPO priced at $21 in 2006, and shares closed at $1,225.25 on August 7, a climb some observers describe as a "legal monopoly" built acquisition by acquisition. That playbook continued after the quarter closed, when TransDigm agreed on July 27 to buy Prince & Izant for roughly $1.07 billion, following the April 7 purchase of Jet Parts Engineering and Victor Sierra for about $2.2 billion. Growth came at a cost to profitability. EBITDA-as-defined margin slipped to 52.8% in the quarter from 54.4% a year earlier, and the nine-month margin fell to 52.6% from 53.8%, as acquisition dilution weighed on the mix. Funding that acquisition spree also added debt, including a $1.5 billion offering completed on April 17 that added new senior subordinated notes and term loans. None of that stopped the buybacks. TransDigm spent $1.0 billion on repurchases in the quarter and $1.8 billion over the first nine months of fiscal 2026. Even so, the market's reaction has been lukewarm. Shares pushed further into their 2026 decline, down nearly 8%, after the report, and by August 7 sat 16.3% below their 52-week high, a sign investors may be questioning how much more the current price already assumes. Hedge fund ownership climbed from 78 to 87 funds, which points to accumulating rather than fading conviction. Short interest sits at just 2.55% of float, suggesting little organized skepticism toward the stock. As of August 11, TransDigm trades at a forward P/E of 25.51, a multiple that assumes continued double-digit earnings growth rather than a slowdown. TransDigm's growth story remains intact, backed by guidance that keeps climbing and a decades-long record of compounding. Still, the stock's recent slide hints that some investors are weighing how much of that growth is already priced in, especially as margins soften and each acquisition adds more debt. Backlog growth and a smooth integration of deals like Prince & Izant would keep the bull case building. While we acknowledge the potential of TDG as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 10 Best Future Stocks to Buy Under $10 and 12 Best Performing Semiconductor Stocks to Invest In. Disclosure: None. Follow Insider Monkey on Google News.

"Hidden gem" describes a high-performing stock that isn't generating much fanfare. In the hidden gem family, some names are undiscovered Hope Diamonds. That's the 45.5-carat gem with an estimated value of up to $350 million. Admittedly, describing that level of jewelry prestige for any stock takes some liberties, but it is befitting of some names in the unheralded camp. TransDigm (NYSE: TDG) is a prime example. Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » First, let's address the recent goings-on at this aerospace and defense parts supplier. The company reported fiscal third-quarter results last week, telling investors sales jumped 23% to $2.74 billion while adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 19% to $1.5 billion. The industrial stock pulled back following the report, extending its 2026 loss to nearly 8%. As of Aug. 7, TransDigm trades 16.3% below its 52-week high, but the stock's history indicates its recent weakness may also be a buying opportunity. Speaking of history... Acknowledging that financial markets are forward-looking enterprises, a quick TransDigm history lesson is worth the time because it reveals how this nondescript aerospace stock is the definition of a compounder and a millionaire maker. The company was formed in 1993 with starting equity of $25 million. After that, no additional equity was raised, but here we are discussing a stock with a market capitalization of $69 billion. TransDigm went public in 2006 at $21 share, and it closed at $1,225.25 last Friday. So even if we're generous and dismiss the stock's lethargy in 2026, it delivered an annualized return of 23.1% through the end of 2025. Investors who missed TransDigm's first decade as a public company weren't cheated if they got involved with the stock 10 years ago. Since then, the shares have risen nearly sixfold, beating the Nasdaq-100 index in the process while thumping the largest industrial exchange-traded fund (ETF). It's safe to say TransDigm is a serial compounder, and part of the reason it attained that status is because it's a serial acquirer. Over the years, it has acquired dozens of purveyors of "mission-critical" aerospace and defense components. It's almost guaranteed that the next time you travel by air, the plane you're on will have at least a few parts manufactured by a TransDigm company. Put differently, TransDigm puts the "wide" in "wide moat." TransDigm is often compared to a private equity firm because its approximately 100 divisions largely operate autonomously. That's comparable to the conglomerate-like structure of Berkshire Hathaway, where Warren Buffett was famous for letting the top executives of units such as Dairy Queen and BNSF Railway do their thing without day-to-day meddling from the boss. Buffett was also famous for embracing wide-moat businesses, and TransDigm certainly checks that box. Buffett's affinity for wide-moat enterprises stems from their pricing power. He once said, "The single most important decision in evaluating a business is pricing power." That wisdom is instructive in evaluating TransDigm's potential to continue compounding. Not only does TransDigm have pricing power, but some market observers also view the company as having a quasi-monopoly because many of its operating divisions face little or no competition. Put simply, TransDigm provides clients with essential products that can't be easily attained elsewhere, and that's an attribute long-term investors need to consider. Before you buy stock in TransDigm Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and TransDigm Group wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $411,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,335,252!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 11, 2026. Todd Shriber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and TransDigm Group. The Motley Fool has a disclosure policy. TransDigm Reported Earnings Last Week. Here's How This Quiet Aerospace Stock Turned $10,000 Into a Fortune. was originally published by The Motley Fool

Image source: The Motley Fool. Tuesday, Aug. 4, 2026 at 11:00 a.m. ET Director of Investor Relations - Mary Hartman President and Chief Executive Officer - Michael Lisman Co-Chief Operating Officer - Patrick Murphy Chief Financial Officer - Sarah Wynne Co-Chief Operating Officer - Joel Reiss Operator: Good day, and thank you for standing by. Welcome to the TransDigm Group Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to hand the conference over to Mary Hartman, Director of Investor Relations. Please go ahead. Mary Hartman: Thank you, and welcome to TransDigm's Fiscal 2026 Third Quarter Earnings Conference Call. Presenting on the call this morning are TransDigm's President and Chief Executive Officer, Mike Lisman; Co-Chief Operating Officer, Patrick Murphy; and Chief Financial Officer, Sarah Wynne. Also present for the call today is our Co-Chief Operating Officer, Joel Reiss. Please visit our website at transdigm.com to obtain a supplemental slide deck and call replay information. Before we begin, the company would like to remind you that statements made during this call, which are not historical in fact, are forward-looking statements. For further information about important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, please refer to the company's latest filings with the SEC available through the Investors section of our website or at sec.gov. The company would also like to advise you that during the course of the call, we will be referring to EBITDA, specifically EBITDA As Defined, adjusted net income and adjusted earnings per share, all of which are non-GAAP financial measures. Please see the tables and related footnotes in the earnings release for a presentation of the most directly comparable GAAP measures and applicable reconciliations. I will now turn the call over to Mike. Michael Lisman: Good morning, and thanks for calling in today. First, I'll start off with the usual quick overview of our strategy; second, make a few comments about the quarter; and third, discuss our fiscal '26 outlook. Then Patrick and Sarah will give some additional color on the quarter. To reiterate, we believe we are unique in the industry in both the consistency of our strategy in both good times and bad as well as our steady focus on intrinsic shareholder value creation through all phases of the aerospace cycle. To summarize, here are some of the reasons why we believe this. About 90% of our net sales are generated by unique proprietary products. Most of our EBITDA comes from aftermarket revenues, which generally have significantly higher margins and over any extended period have typically provided relative stability in the downturns. We follow a consistent long-term strategy. First, we own and operate proprietary aerospace businesses with significant aftermarket content. Second, we utilize a simple, well-proven, value-based operating methodology. Third, we have a decentralized organizational structure and unique compensation system closely aligned with our shareholders. Fourth, we acquire businesses that fit this strategy and where we see a clear path to private equity-like returns. And lastly, our capital structure and allocation are a key part of our value creation methodology. Our long-standing goal is to give our shareholders private equity-like returns with the liquidity of a public market. To do this, we stay focused on both the details of value creation as well as careful allocation of our capital. As you saw from our earnings release, we delivered another solid quarter with Q3 results exceeding expectations. As a result, we are raising guidance for the year. During the quarter, we saw healthy growth in revenue, both sequentially and compared to the prior year in all 3 of our market channels: commercial OEM, commercial aftermarket, and defense. In commercial aftermarket, we delivered a strong performance in Q3 with the commercial transport component of our commercial aftermarket growing 18% versus the prior year period. Further, given the strong performance seen to date as well as our current expectations for Q4, we raised our commercial aftermarket guidance for the year. Note that we are seeing this healthy growth despite the overall decline in RPMs arising from the conflict in the Middle East from which we have yet to see any material impact. In the commercial OEM market, sales have increased well into the double digits as production rates at Boeing and Airbus have continued to steadily rise over the past few quarters. And lastly, our defense end market saw a double-digit revenue increase this quarter and continues to build backlog that will drive growth as we finish fiscal 2026 and head into our fiscal 2027. Our EBITDA As Defined margin was 52.8% in the quarter, which includes more than full 2 percentage points of dilution from recent acquisitions. This is an improvement sequentially from Q2 with higher volumes and strong performance across all market channels. The sequential margin improvement is in spite of margin headwind of about 0.5 percentage point in the quarter related to the newly acquired Jet Parts and Victor Sierra operating units. Our acquisitions continue to contribute meaningfully as well and over time, should see an expansion in their respective operating margins. Additionally, we had strong operating cash flow generation in Q3 of over $700 million and ended the quarter with nearly $2.8 billion in cash. Before I get into our usual capital allocation update, I would like to quickly provide some additional color on our withdrawal from the acquisition of Stellant in mid-July. This was a difficult decision that came after the Department of Justice notified us that they intended to challenge the transaction. While we respectfully disagreed with the DOJ's decision on the matter, ultimately, the complications and hurdles that would have arisen from continuing with the acquisition through litigation, coupled with the time line constraints in the stock purchase agreement contributed to our decision to withdraw and pursue other targets. At the end of the day, we will always be practical and prioritize the best long-term use of our shareholders' capital and our management resources. We felt we did that here. And the outcome, though disappointing, won't impact our future M&A approach. We are always actively working away on new targets. Next, an update on our capital allocation activities and priorities. Regarding the current M&A activities in the pipeline, we continue to actively look for opportunities that fit our model. As usual, the potential targets are mostly in the small and midsize range. As always, we'll remain disciplined around our approach to M&A. Additionally, acquisitions are, by their nature, hard to predict. So consistent with past practice, I will not be saying too much on what is currently active in our funnel. Last week, we announced that we agreed to acquire Prince & Izant from Industrial Growth Partners for approximately $1.1 billion in cash. Prince & Izant is a leading global designer and manufacturer of highly engineered brazing alloys and specialty medical components used across a range of advanced performance and high cost of failure applications. The company primarily supports the aerospace and defense, aeroderivative turbine, and transportation end markets. It is expected to generate approximately $360 million of revenue for the 2026 calendar year. We've tracked this Cleveland-based company for some time now, and Prince & Izant's highly engineered solutions and excellent customer service align well with TransDigm's acquisition strategy. We look forward to getting the transaction closed and welcoming the company into the fold. The capital allocation priorities at TransDigm are unchanged. Our first priority is to reinvest in our businesses; second, do accretive disciplined M&A; and third, return capital to our shareholders via buybacks or dividends. A fourth option, paying down debt, seems unlikely at this time, though we do still take this into consideration. We are continually evaluating all of our capital allocation options. As we sit here today, we have significant liquidity and financial flexibility to meet any likely range of capital requirements or other opportunities in the readily foreseeable future. Specifically, we have substantial M&A firepower and capacity remaining, in excess of $10 billion. Moving to our outlook for fiscal 2026. As noted in our earnings release, our business outlook has continued to strengthen. We're increasing our full fiscal year '26 sales and EBITDA As Defined guidance to reflect another solid quarter of results and our current expectations for the remainder of the year. At the midpoint, sales guidance was raised $150 million and EBITDA As Defined guidance was raised $100 million. Current guidance for fiscal 2026 is as follows and can be also found on Slide 6 in the presentation. The midpoint of our fiscal '26 revenue guidance is now $10.51 billion or up approximately 19% over the prior year. With regard to the market channel growth rate assumptions in this revenue guidance, the full year market channel assumptions for our 3 primary end markets are also being increased to account for our results to date and expectations for the final quarter. The updated revenue guidance provided today is based on the following market channel growth rate assumptions. We expect commercial OEM growth in the mid-teens percentage range. We expect commercial aftermarket revenue growth to be in the low-double-digit percentage range, and we expect defense revenue growth in the high-single-digit to low-double-digit percentage range. The midpoint of fiscal 2026 EBITDA As Defined guidance is now $5.52 billion or up approximately 16% versus the prior year, with an expected margin of around 52.5%. We're very pleased with our margin performance in the year-to-date period and continue to perform ahead of our expectations. As discussed in prior quarters, the guidance includes more than 2 full percentage points of margin dilution related to recent acquisitions compared to the prior fiscal year quarter. The midpoint of adjusted EPS is now expected to be $41.04. We believe we're well positioned for the last quarter of fiscal 2026. We'll continue to closely watch how the aerospace and capital markets develop and react accordingly. Lastly, I'd like to reiterate how pleased we are with the company's performance this quarter. Our teams remain focused on our value drivers, cost structure and operational excellence. We will continue to control what we can control and expect that our disciplined, consistent strategy will deliver the value you have come to expect from us. With that, I will now hand it over to Patrick Murphy, TransDigm's Co-COO, to review our recent performance and a few other items. Patrick Murphy: Good morning, everyone. I'll start with our typical review of results by key market category. For the remainder of the call, I'll provide commentary on a pro forma basis compared to the prior year period in 2025. That is assuming we own the same mix of businesses in both periods. For reference, the market discussion includes the acquisition of Simmonds Precision Products, but excludes Jet Parts Engineering and Victor Sierra Aviation acquisitions. Purpose of excluding these newly acquired businesses is for 2 reasons. First, we are still working through the integration and aligning their data into our reporting structure. Second, we want to highlight the strong aftermarket performance of our base business. Beginning with the fiscal 2027 guidance, Jet Parts and Victor Sierra will be included in pro forma reporting. In the commercial market, we will split our discussion into OEM and aftermarket. Our total commercial OEM revenue increased approximately 17% in Q3 compared with the prior year period. As we anticipated, commercial OEM added another quarter of strong revenue growth. Commercial transport OEM revenues, which excludes the bizjet submarket, were up 25% over the comparable prior period. This is primarily driven by the production improvements at Boeing and Airbus, and our teams are well positioned to support the increasing build rates. As Boeing and Airbus production rates continue to climb, we anticipate continued strength in the commercial OEM market. Commercial OEM bookings posted another quarter of solid growth compared to the same prior year period, significantly outpacing sales. Commercial transport bookings had double-digit growth for the third quarter, which represents another quarter of consistent growth for the commercial OEM market. As you know, commercial OEM bookings is an important leading indicator for our commercial OEM business, and we are pleased that our book-to-bill rate remains solidly positive in Q3. Today's commercial OEM guidance assumes that the OEMs maintain their rates for the remainder of our 2026 fiscal year. The commercial OEM guidance we are giving today contains what we believe is an appropriate level of risk around the production build rate for the 2026 fiscal year. Fiscal '26 commercial OEM revenue guidance range, as Mike mentioned, is increasing to the mid-teens percentage growth range based on the performance to date, current outlook for the remainder of our fiscal year. Now moving on into our commercial aftermarket business discussion. Total commercial aftermarket revenue increased by approximately 17% compared to the prior year period. As a reminder, this excludes our newly acquired Jet Parts Engineering and Victor Sierra Aviation businesses. This quarter, nearly all submarkets delivered strong performances in the quarter. Our commercial transport aftermarket revenue growth, which excludes our bizjet submarket, was up 18%, driven by solid growth in the transport submarkets of engine, passenger, and interiors, while freight was roughly flat for the quarter. Q3 bookings in commercial aftermarket delivered ahead of our expectations for the third quarter in a row. Bookings continue to support the full year growth outlook, and we are well positioned to execute our fourth quarter. Additionally, POS at our distributors also grew double digits on a percentage basis this quarter. As Mike already mentioned, we are raising our commercial aftermarket revenue growth guidance from high-single-digit to low-double-digit range up to the low-double-digit range based on our strong performance through Q3 as well as our current backlog and outlook for the remainder of the year. I also wanted to comment briefly on the conflict in the Middle East. While jet fuel prices have risen from pre-conflict levels and select airlines have adjusted capacity in the short term, we have not yet seen any meaningful slowdowns in our commercial aftermarket. We continue to monitor the situation in close partnership with our customers, and we'll take all appropriate actions if something changes. Now shifting to our defense market. Defense market revenue, which includes both OEM and aftermarket revenues, grew by approximately 11% compared with the prior year period. Over the past year, we have seen strong growth in the defense market, driven by a combination of new business wins and excellent operational execution from our teams. This positions us well for continued growth in the defense market. Q3 defense revenue growth was well distributed across our businesses and customer base. Both OEM and aftermarket components in our defense market were up versus the prior year with aftermarket running slightly ahead of OEM. Defense bookings for the quarter increased nicely, up both year-over-year and sequentially and outpacing sales for the period. Our strong bookings this year support our guidance of high-single digits to low-double digits. As we have said many times before, defense sales and bookings can be lumpy, especially quarter-to-quarter. But the current environment remains positive for defense spending and the global defense outlook continues to indicate this end market will remain solid heading into next year. Moving on to our value drivers. I wanted to touch on a few new business wins that the teams have secured in the last quarter, specifically driven by highly engineered innovative technical solutions. Adams Rite Aerospace was recently awarded a major line fit position with a leading airframer for its complete touch-free lavatory product suite. The award covers the full portfolio, including a touchless faucet, touchless flush switch, and touchless waste bin door. These products incorporate next-generation sensors and robust aircraft-specific designs engineered to withstand the demanding high-use environment of modern aircraft lavatories. The Avionics Instruments team was engaged by a major supplier of fighter aircraft to develop a new battery for a critical aircraft system when the previous supplier was unable to sustain the program. The battery powers main aircraft operations during ignition and flight, enabling the platform to carry out diverse and complex missions. Our team took the program from design through qualification and into production in under 2 years, giving the customer a qualified production-ready replacement that kept the war fighter mission ready. Our Electromech business developed a precision electromechanical actuator engineered to control landing gear deployment and retraction on a new unmanned combat aircraft. Compact mission-critical design combines high load capability, precise motion control, reliable performance in demanding flight environments. Canyon AeroConnect developed a new audio indicator capability for its AMU50 Digital Audio Control System, DACS, to meet the new U.S. Forest Service aircraft requirement, enhancing pilot situational awareness by providing a visual indication of incoming radio transmissions regardless of audio volume or mute status. These innovation-driven new product wins will deliver substantial new business revenue over the next 3 years from prototype and LRIP orders as the teams work toward full production. Now a quick update on our acquisition integration activities. Simmonds Precision, which was acquired at the beginning of our fiscal year, continues to progress nicely and run ahead of our expectations. Jet Parts and Victor Sierra acquisitions closed early in the third quarter and are also progressing beyond our expectations. We have experienced EVPs assigned to each of the operating units and are very pleased with the team's progress to date. Still early in our ownership, but these businesses are a good complement to our existing portfolio, and we are excited that they are a part of TransDigm. I would like to wrap up by recognizing the strong contributions of our operating units during this third quarter of fiscal '26. Our management team stay focused on our consistent operating strategy, executing our value drivers, working hard to satisfy our customers' growing demand. We are truly pleased with the impressive results our teams delivered for our shareholders this quarter. With that, I'd like to turn it over to our Chief Financial Officer, Sarah Wynne. Sarah Wynne: Thanks, Patrick, and good morning, everyone. I'll recap the financial highlights for the third quarter and then provide some more information on the guidance. First, on organic growth and liquidity. In the third quarter, our organic growth rate was approximately 13%, and all market channels contributed to this growth as previously discussed by Mike and Patrick. On cash and liquidity, free cash flow, which we traditionally define as EBITDA less cash interest payments, CapEx, cash taxes, was approximately $870 million for the quarter, coming in at $2.1 billion on a year-to-date basis. For the full fiscal year now, we expect our free cash flow guidance to be closer to $2.6 billion, an increase from the prior guide of $2.5 billion. Below that free cash flow line, net working capital consumed approximately $160 million of cash in the quarter. For the full year, we expect working capital to end roughly in line with historical levels as a percentage of sales. We ended the quarter with a cash balance of $2.8 billion, and our net debt-to-EBITDA ratio ended the quarter just slightly up from the prior quarter of 5.8x. This cash balance, together with our available debt capacity, gives us ample liquidity to fund the pending Prince & Izant acquisition. More broadly, our strategy is to operate in the 5 to 7 net debt-to-EBITDA ratio range, which preserves capacity for additional acquisitions and other capital deployment as opportunities arise. Regarding our debt, our capital allocation strategy is to both proactively and prudently manage our debt maturity stack by keeping near-term maturities well extended. In addition, approximately 75% of our $33.7 billion gross debt balance is fixed through fiscal 2029. This is achieved through a combination of fixed rate notes, interest rate swaps, caps and collars. This provides meaningful cushion against any near-term rate movements. Our EBITDA to interest expense coverage ratio ended the quarter at 3x, which provides us with comfortable cushion versus our target range of 2 to 3. During the quarter, we continued to apply the same targeted return criteria we have consistently applied over the years, and that led us to opportunistically deploy about $980 million of capital via open market repurchases of our common stock. This equates to approximately 800,000 shares at an average purchase price of approximately $1,208 per share. Including our first and second quarter repurchase activity, year-to-date repurchases now total $1.8 billion. We expect these repurchases to meet or exceed our long-term return objectives. We continue to seek the best opportunities for providing value to our shareholders through our capital allocation strategy. We think we remain in a strong position to do that with adequate flexibility to continue to pursue M&A opportunities or return cash to our shareholders via share buybacks and/or additional dividends. With that, I'll hand it back to Mary Hartman, our Director of Investor Relations. Mary Hartman: Before we open the line for Q&A, I'd ask everyone in the queue to consider your fellow analysts and ask one question only, so we can get to as many people as possible. Operator, can you please open the line? Operator: [Operator Instructions] Our first question comes from Robert Stallard with Vertical Research. Robert Stallard: Mike, this might be a question for you. There's been some legislation moving through the Congress on this whole right to repair issue on the defense side. Do you think this could have any implications for TransDigm down the line? Patrick Murphy: Rob, this is Patrick. I'll take that. The proposed bill is still evolving. So we don't want to presume or comment until it becomes final. Obviously, I think you know this will impact a broad base of companies, platforms and products. But right now, we're not in a position to really comment on something that hasn't become law. Operator: Our next question comes from Ken Herbert with RBC Capital Markets. Kenneth Herbert: I just wanted to ask on -- yes, Mike, maybe on Stellant, did that DOJ review have any impact on your desire for incremental defense M&A? And maybe if you could provide a little bit more detail on what you're seeing in terms of the M&A pipeline today around the end market exposures. Michael Lisman: Yes, Ken, this came via the HSR process in the U.S. and a couple of things. First, we think it's a one-off, not in any way indicative of our ability to get future deals through. In fact, the Jet Parts and Victor Sierra transactions, both of which closed successfully, those approvals were actually filed after the Stellant one was filed and submitted. And I think you know you followed us for a long time. Out of 100 acquisitions in our history, this is the third one that didn't cross the finish line for these kinds of reasons. It just happens from time to time. We were working with the regulatory authority that took a slightly different view on the nature and sensitivity of the overlap, and it's always hard, as you know, how the market gets defined is tough. Different parties can take different views on that, and we were unfortunately not able to come to agreement on this one. With regard to how it affects future strategy, as I tried to address in the comments, it doesn't on the M&A front. We're seeing a lot of activity presently across both commercial and defense markets in aerospace. And the team -- our M&A team remains very busy looking through a current list of targets. Operator: Our next question comes from Gavin Parsons with UBS. Gavin Parsons: Guys, usually, your aftermarket activity lags flight activity by maybe a couple of quarters. So just -- it sounds like you have good visibility for this quarter, but thoughts on why the strength and why the disconnect relative to flight activity, if that will catch up to you. Patrick Murphy: Yes. It's probably one of those things where you're right. Our backlog, our leading indicators put us in a good position to deliver the current quarter and fiscal year. It's tough to say whether -- what that will mean in the future, right? Things continue to evolve. One quarter is really hard for us to predict 3, 4 quarters out at this point in time. So we can only control what we control. Our aftermarket sort of books and ships about 50% or so in the same quarter, and that's what we've got the most visibility to at this time. Michael Lisman: And I'd just add, Gavin, we're -- as Patrick and I both said in our comments, we're just not seeing any material impact on our business from what's going on in the Middle East and some of the changes in RPM and takeoffs and landing rates yet. Operator: Our next question comes from Sheila Kahyaoglu with Jefferies. Sheila Kahyaoglu: Maybe just a follow-up on the last question. Can you talk about commercial aftermarket in the quarter, up 17% versus the 14% in Q2. Can you just parse out the drivers of that maybe across engines? You mentioned freight is flat. How is interiors and airframe work? And if you could just discuss the moving pieces there. Patrick Murphy: Yes, Sheila, I would just say that in general, we're seeing a broad-based demand across all of our platforms and customers. We are seeing more strength in engine and in passenger, which is a bigger part of our aftermarket. And we're seeing good strength though in interiors. We've seen good strength all year. Q3 was a little lighter than we had seen earlier, but overall good across all submarkets. Operator: Our next question comes from Kristine Liwag with Morgan Stanley. Kristine Liwag: Mike, the stock's valuation seems relatively range bound for some time. And the concern has been that with TransDigm's size, it might be increasingly difficult to find aerospace acquisitions that are large enough to move the needle. And look, you've announced a few of these, but the stock is still not moving. I guess in the past, the market awarded TransDigm with more of a premium multiple because of the focus on aerospace defense. But now that this perceived ceiling appears to be contributing to more discounted valuation, I was wondering what your appetite is for potentially broadening out the targets and look at other industrial markets that meet the business characteristics of your criteria, which are proprietary with strong aftermarket. Just because if you look at companies like Amphenol, I mean, they're even trading at a higher multiple than you and they've got -- they're able to apply their playbook in a much larger addressable market just outside of aerospace and defense. Michael Lisman: Sure. Happy to take that one. I'd say a couple of things. At this time, we remain primarily focused on looking at the aerospace and defense sector. That is 95% of our current revenue. It is what we do. It's the sectors we know. Year-to-date, we've done, once Prince & Izant gets closed, well north of $3 billion of acquisitions of companies that primarily serve our core aerospace and defense end market. That's where the M&A team is currently spending the bulk of their time. In the fullness of time, could we potentially branch out and consider other things? That's always a potential chance. But as we sit here today, the focus remains on aerospace and defense, and that's where -- that's what's getting the bulk of our time. We're pretty excited about Jet Parts and Victor Sierra. As Patrick mentioned in some of the comments, it's early innings there. We're excited about Prince & Izant, look forward to getting that one closed as well. And we still see good opportunities from here on out in sort of our core fairway of aerospace and defense, and that's where the focus is going to remain at this time. Operator: Our next question comes from David Strauss with Wells Fargo. David Strauss: Could you just talk on the margin performance year-to-date and what you're expecting in Q4? I know you've talked about like 200 basis points of dilution from deals and then headwind from ROE-related growth, but it looks like you're going to come in more like 140, 150 bps down year-over-year, so a lot less than kind of what's implied by those different moving pieces. So if you could just touch on the performance year-to-date and Q4, it looks like you're implying a little bit down relative to Q3. Sarah Wynne: David, this is Sarah. I'll answer maybe the latter part of your question and let Mike kind of fill in on some more of the color and detail there. Obviously, we're glad to increase our guidance. EBITDA margins up to 25.5% (sic) [ 52.5% ], an extra 20 basis points on that. And obviously, Q3 came in strong at 52.8%. So it does imply a drop for Q4. Hopefully, for the Q4, we hope to be conservative. We've got a full quarter now of Jet and Victor, but we just got them, and we have some strong OEM and other growth there. So hopefully some conservatism on that. If you look at it year over prior year, yes, there's a 200 basis point increase because obviously, we've got Simmonds in Q1. So we've got a full year of Simmonds and then also with Jet and Victor halfway through that year as well. So that plays into some of the dilution. But I'll let Mike chime in on any other color on the market. Michael Lisman: Yes, David, I would just add the -- we had a lot of dilution because of the acquisitions we completed that weighed us down more than 2 full percentage points. So that's contributed. And we're in the early innings of owning those businesses just for a couple of months or so. So we certainly don't want to get out over our skis in terms of the margin assumptions for Q4. We don't think we gave any on the margins incredibly aggressive guidance as we sit here today for Q4. As you know, we'll always push it here and try to outperform and do better. And we think that's certainly in the cards for Q4. Operator: Our next question comes from Myles Walton with Wolfe Research. Myles Walton: I was hoping you could touch on Jet Parts and Victor Sierra. I know you mentioned it wasn't in the pro forma breakdown by end market, but I guess I thought it was all commercial aftermarket. And then could you comment on what you saw actually in the almost full quarter of ownership of growth relative to your 17% market growth in commercial? Michael Lisman: Yes, Myles, it's Mike. I'll take that one. We're early in owning the businesses. As Patrick said in his comments, the intent was nothing more than to show the strong commercial aftermarket performance of our base businesses, the core starting stores from TransDigm at the start of the year, and that was the goal. With regard to whether Jet Parts or Victor Sierra were in or out for the quarter, it doesn't materially change the percentage growth that we saw. All businesses are performing well. I think on Jet Parts and Victor Sierra, as we said on prior earnings calls, these are businesses that are growing at a really good clip, not explosive growth, but growth that's a little bit ahead of what the broader aerospace and defense components landscape is seeing. We're happy to own them. We're happy to be able to partake in some of that growth. It's a critical part of why we bought these businesses, and we're happy to own them. And so far, it's been so good in these first couple of months of ownership. Operator: Our next question comes from Scott Mikus with Melius Research. Scott Mikus: Mike, Prince & Izant, it provides brazing alloys that are often nickel or cobalt based and used in engines. Just given the advanced materials, is it fair to assume that Prince & Izant has significantly higher content on the 737 MAX and A320neo relative to the predecessor programs, given that they were reengines? Michael Lisman: I would say we've not specifically disclosed content on recent acquisitions on specific platforms. As we said in the comments, this is a good business. We're excited to own it. It serves primarily our end markets, proprietary content unique to the applications they serve, really customized stuff in terms of the chemistry and formulations they bring and provide to the end customer. It's mostly aftermarket, serving a large installed base. We're familiar with the applications across some of our existing businesses. And it's got decent content within aerospace and defense on engine platforms, things like fuel nozzles, rocket engines. So good content sort of right down the fairway for us in terms of fit with broader TransDigm, excited to own it. Operator: Our next question comes from Gautam Khanna with TD Securities. Gautam Khanna: Was wondering because you've done some buybacks year-to-date, how you prioritize special dividends? Like how likely are we to see one of those given the other things you commented about with the M&A pipeline. This is about the time where one gets announced if there is to be one. So just your view on buybacks versus dividends in the absence of M&A. Sarah Wynne: Sure. This is Sarah. I'll take that one. Yes. Yes, you're right. And obviously, we continue to assess both options of buybacks and dividends. Obviously, on the buybacks, it's got to follow the criteria of meeting the same IRR returns. So that's what plays into our thinking on repurchases. And then as we look to dividends, ultimately, we're sitting comfortably at the midpoint of our net debt-to-EBITDA ratio range of 5 to 7. And so we'll continue to see what makes the most sense as we evaluate both of those options, which you know we do. We obviously want to maximize the shareholder value with these decisions. And so as we look to close out both the fiscal year and the calendar year, we'll look to make what makes the most sense on those decisions. Operator: Our next question comes from Seth Seifman with JPMorgan. Seth Seifman: I wanted to follow up on one of the margin questions that David asked earlier. Coming into this year, you talked about dilution, not just from the M&A, but also from mix. And I guess maybe the aftermarket has turned out a little bit better than expected this year. But as we go forward, how do you think about mix as a component of what we should expect from margin? When I was listening to the last quarter's call, it seemed like you kind of still expect that 100 to 150 basis points expansion in the organic business almost regardless of mix. So maybe if you can update us on your thoughts about mix and how it affects margin. Michael Lisman: Yes. I would say constant mix, the target is the same for year-over-year margin improvement. We've always been able to and continue to, this year in our base businesses, drive margin improvement on a constant mix basis of 1 percentage point or slightly better, maybe up to 1.5%. That's unchanged. That's not going to change anytime in the near future either going forward. We expect to be able to continue to drive that same kind of performance. With regard to whether or not you take a bit of headwind from mix shift, that can happen from time to time. It amounts to like a couple of tenths of a point, though, on the margin, usually not anything material. At least that's what we're seeing year-to-date with both commercial OEM and aftermarket growing, albeit OEM a little bit better. So slight headwind, but nothing that weighs you down and we think will prevent us from hitting something close to our targets or within the goalpost, the 2 ends of the target range that I provided. Operator: Our next question comes from Ronald Epstein with Bank of America. Alexander Christian Preston: This is Alex Preston on for Ron this morning. Just on commercial OE, you explained the assumptions behind the '26 guide, but I'm curious if you could maybe comment on your view on the OE ramps into 4Q and fiscal '27? And maybe more broadly, if you can update us on the supply chain if conditions are still easing as in prior quarters or if there are any areas where there are maybe lingering issues still? Patrick Murphy: Yes. Alex, this is Patrick Murphy. Yes, obviously, as we mentioned, we're pretty excited about the growth that we're seeing from Airbus and from Boeing as they ramp up those growth rates year-over-year. It's been a nice boost to us this year. Our bookings continue to be a good leading indicator. And as we look at Q4, this is still a strong part of our business. Now as we get to 2027, we believe that Boeing and Airbus are well positioned to continue to march along the path that they've put forth, and we're in a great position to support them on that. So we are seeing positive growth here along the lines that Boeing and Airbus are communicating and our businesses are in line to support that. The supply chain as a whole we think is reasonably solid, but it's something we continue to monitor, right? This is a very broad-based supply chain. You see the same things out there that we see. Our suppliers have performed well enough to continue to keep us in a good position, and that's what we aim to do for Boeing and Airbus. Operator: Our next question comes from Scott Deuschle with Deutsche Bank. Scott Deuschle: Mike or Patrick, just to follow up on Rob's earlier question and to ask it another way. Can you give us a sense as to how many SKUs the defense business sells and the average volume on those SKUs? Like is this a 1,000 SKU business in which 100 repairs or PMAs have a big impact on your growth? Or is it more like a 50,000 SKU business where it would be a lot harder for third-party repairs to impact your growth? Michael Lisman: Yes, Scott, it's Mike. I'll take that one. Yes. On the -- the legislation is changing quite a bit. So we're hesitant, as Patrick said, to step out and try to assess its final form just because there are so many moving parts right now. It's really hard to step out and opine. But broadly speaking, our defense business in aggregate is numerous SKUs, think tens of thousands, hundreds of thousands, not just thousands. But a big bucket of parts sold broadly, largely derived from commercial technologies, and that's what comprises the bulk of what we provide to defense customers, not just in the U.S. but also globally. So I think as the legislation comes into more final form on future calls, we'll be in a better position to give more -- have more of a concrete discussion on it. Operator: That concludes today's question-and-answer session. I'd like to turn the call back to Mary Hartman for closing remarks. Mary Hartman: Thank you all for joining us today. This concludes the call. We appreciate your time, and have a good rest of your day. Operator: Thank you for participating. You may now disconnect. 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Interested in Transdigm Group Incorporated? Here are five stocks we like better. TransDigm raised its fiscal 2026 outlook after third-quarter results exceeded expectations, increasing midpoint revenue guidance to $10.51 billion and EBITDA As Defined guidance to $5.52 billion. Adjusted EPS is now expected to reach $41.04, with projected revenue growth across commercial OEM, aftermarket and defense markets. Third-quarter performance was broad-based: commercial OEM and aftermarket revenue each rose about 17% year over year, commercial transport aftermarket revenue increased 18%, and defense revenue grew 11%. The company reported a 52.8% EBITDA margin and $870 million in quarterly free cash flow. TransDigm remains active in capital allocation and acquisitions, repurchasing about $980 million of stock during the quarter and agreeing to acquire Prince & Izant for approximately $1.1 billion. Although it withdrew from the proposed Stellant Systems deal following DOJ opposition, management said its M&A strategy remains unchanged and that it retains more than $10 billion in acquisition capacity. Airplane Maintenance Companies That Keep Flights Moving Are Ready to Soar TransDigm Group (NYSE:TDG) raised its fiscal 2026 sales, EBITDA and commercial aftermarket outlook after reporting third-quarter results that management said exceeded expectations, supported by growth across commercial OEM, commercial aftermarket and defense markets. President and Chief Executive Officer Mike Lisman said the company generated healthy sequential and year-over-year revenue growth in all three primary market channels. He said TransDigm’s commercial transport aftermarket business grew 18% from the prior-year period, while commercial OEM sales rose into the double digits as Boeing and Airbus production rates continued to increase. → No Hangover: Revisiting Microsoft One Week After Earnings RKLB, ASTS, TDG: Insiders are Selling These 3 Space Stocks “As a result, we are raising guidance for the year,” Lisman said. The company increased the midpoint of its fiscal 2026 revenue outlook by $150 million and raised the midpoint of EBITDA As Defined guidance by $100 million. Co-Chief Operating Officer Patrick Murphy said total commercial OEM revenue increased approximately 17% year over year on a pro forma basis, with commercial transport OEM revenue rising 25%. The commercial transport figure excludes the business-jet submarket. → MarketBeat Week in Review – 08/03 - 08/07 TransDigm’s Edge: From Spare Parts to Sky-High Profits Murphy attributed the commercial OEM growth primarily to production improvements at Boeing and Airbus. He also said commercial OEM bookings significantly outpaced sales during the quarter, and the company’s book-to-bill ratio remained “solidly positive.” Total commercial aftermarket revenue increased approximately 17% from the prior-year period, excluding recently acquired Jet Parts Engineering and Victor Sierra Aviation Holdings. Commercial transport aftermarket revenue increased 18%, driven by growth in engine, passenger and interior-related markets, while freight revenue was roughly flat in the quarter. → Why the Landlord of the AI Boom Could Outlast the Chipmakers Management said commercial aftermarket bookings exceeded expectations for a third consecutive quarter, while point-of-sale activity at distributors increased by a double-digit percentage. Although the conflict in the Middle East has affected revenue passenger miles and caused some airlines to adjust capacity, Lisman said TransDigm had not experienced a material impact on its aftermarket business. Defense revenue rose approximately 11% year over year, with both OEM and aftermarket revenue increasing. Murphy said defense aftermarket growth ran slightly ahead of OEM growth, while bookings increased both sequentially and year over year and exceeded sales for the period. TransDigm reported an EBITDA As Defined margin of 52.8% in the third quarter. Lisman said the margin improved sequentially from the second quarter as higher volumes and operating performance supported results across market channels. The quarterly margin included more than two percentage points of dilution from recent acquisitions, including an approximately half-percentage-point sequential headwind related to Jet Parts Engineering and Victor Sierra Aviation Holdings. Management said it expects margins at acquired businesses to expand over time. Chief Financial Officer Sarah Wynne said organic growth was approximately 13% in the third quarter. The company generated approximately $870 million of free cash flow in the quarter and $2.1 billion year to date. TransDigm now expects full-year free cash flow of approximately $2.6 billion, up from its prior $2.5 billion outlook. The company ended the quarter with $2.8 billion of cash and a net debt-to-EBITDA ratio of 5.8 times. Wynne said TransDigm targets a net debt-to-EBITDA range of five to seven times. Approximately 75% of its $33.7 billion gross debt balance is fixed through fiscal 2029 through fixed-rate notes and interest-rate instruments, she said. During the quarter, TransDigm repurchased approximately $980 million of common stock, or about 800,000 shares, at an average price of approximately $1,208 per share. Year-to-date repurchases totaled $1.8 billion. Lisman addressed TransDigm’s withdrawal from its proposed acquisition of Stellant Systems after the Department of Justice indicated it intended to challenge the transaction. He said the company disagreed with the DOJ’s view but decided that litigation-related complications and timing constraints in the purchase agreement warranted ending the pursuit. Lisman characterized the outcome as a one-off event and said it would not alter the company’s M&A strategy. He said TransDigm continues to see activity across commercial and defense aerospace markets and retains more than $10 billion of acquisition capacity. The company recently agreed to acquire Prince & Izant from Industrial Growth Partners for approximately $1.1 billion in cash. Prince & Izant designs and manufactures brazing alloys and specialty metal components for aerospace and defense, aeroderivative turbine and transportation applications. The business is expected to generate approximately $360 million of revenue in calendar 2026. TransDigm also said its integrations of Simmonds Precision Products, Jet Parts Engineering and Victor Sierra Aviation Holdings were progressing well. Management did not include Jet Parts Engineering and Victor Sierra Aviation in its pro forma market reporting for the quarter because those businesses are still being integrated into its reporting structure. At the midpoint of its revised guidance, TransDigm expects fiscal 2026 revenue of $10.51 billion, representing approximately 19% growth from the prior year. The company now expects: Commercial OEM revenue growth in the mid-teens percentage range. Commercial aftermarket revenue growth in the low-double-digit percentage range. Defense revenue growth in the high-single-digit to low-double-digit percentage range. The midpoint of EBITDA As Defined guidance was raised to $5.52 billion, up approximately 16% from the prior year, with an expected margin of about 52.5%. Adjusted earnings per share are now expected to be $41.04 at the midpoint of guidance. Management said the outlook assumes Boeing and Airbus maintain their production rates through the remainder of TransDigm’s fiscal year. Murphy said the company’s supply chain has performed sufficiently to support customer demand, though TransDigm continues to monitor broader supply-chain conditions. TransDigm Group Incorporated is a designer, producer and supplier of engineered aircraft components and systems for commercial and military aerospace applications. The company's product portfolio covers a broad range of mission-critical parts and subsystems, including mechanical and electromechanical components, ignition and fuel system parts, sensors and actuators, cockpit and cabin systems, and other safety-critical hardware. TransDigm supplies original equipment manufacturers (OEMs) as well as the aftermarket, providing spare parts, repair and overhaul services and component support throughout an asset's life cycle. TransDigm's operating model places emphasis on proprietary, niche components that are difficult to replace, and the company operates through a collection of independently run subsidiaries and brands that sell specialized products. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Transdigm Group Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance exceeded expectations in Q3, driven by a 17% increase in commercial aftermarket revenue and double-digit growth across all market channels. Commercial OEM growth of 17% was supported by steadily rising production rates at Boeing and Airbus, with bookings significantly outpacing sales as a leading indicator. The EBITDA margin of 52.8% reflects strong volume performance, despite more than 2 percentage points of dilution from recent acquisitions like Simmonds Precision. Management withdrew from the Stellant acquisition due to DOJ litigation hurdles, prioritizing the practical use of capital and management resources over prolonged legal challenges. The acquisition of Prince & Izant for $1.1 billion aligns with the core strategy of owning highly engineered, proprietary aerospace components with high costs of failure. Defense revenue grew 11%, benefiting from new business wins and a positive global spending environment that is building backlog for fiscal 2027. The company maintains a decentralized structure and value-based operating methodology, focusing on proprietary products that generate stable, high-margin aftermarket revenue. Full-year revenue guidance was raised to $10.51 billion, assuming commercial OEM growth in the mid-teens and commercial aftermarket in the low-double digits. EBITDA guidance was increased to $5.52 billion with an expected margin of 52.5%, incorporating conservative assumptions for newly acquired units in Q4. Management assumes current OEM production rates will remain stable for the remainder of the fiscal year, with appropriate risk buffers for potential build rate volatility. The company retains over $10 billion in M&A capacity and continues to evaluate small to midsize targets primarily within the aerospace and defense sectors. Guidance assumes no material impact from Middle East conflicts, though management continues to monitor potential risks to RPMs and airline capacity. Deployed $980 million in the quarter for open market share repurchases, totaling $1.8 billion year-to-date, meeting long-term IRR objectives. Approximately 75% of the $33.7 billion gross debt is fixed through fiscal 2029, providing a hedge against near-term interest rate movements. The withdrawal from the Stellant deal is viewed as a one-off regulatory event and is not expected to impact the broader M&A strategy or future filings. Recent acquisitions Jet Parts Engineering and Victor Sierra Aviation contributed a 0.5 percentage point margin headwind in Q3 during their initial integration phase. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management declined to speculate on the impact, noting the bill is still evolving and has not yet become law. The defense business involves hundreds of thousands of SKUs, many derived from commercial technologies, which complicates any immediate assessment of the legislation's reach. TransDigm remains focused on aerospace and defense, which comprises 95% of revenue, despite analyst suggestions to broaden into other industrial markets. Management emphasized that the current M&A pipeline in their core 'fairway' remains active and productive, as evidenced by $3 billion in deals year-to-date. Management noted a disconnect where aftermarket demand remains strong despite some declines in global RPMs due to Middle East conflicts. Visibility is limited to the current quarter as 50% of aftermarket orders 'book and ship' within the same period, but current backlogs remain robust. The company targets 100 to 150 basis points of organic margin expansion annually on a constant-mix basis. While OEM growth can create a slight mix headwind, management characterized it as only a few 'tenths of a point,' which does not prevent hitting overall margin targets.