Transdigm Group (T7D) Q4 2026 Earnings Report

The call was strongly positive overall. TransDigm reported broad-based double-digit growth, record share repurchases, strong cash flow, healthy bookings and backlog, and positive fiscal 2027 revenue and EBITDA guidance. The main challenges were lower RPK expectations, acquisition-related margin dilution, elevated leverage and interest expense, supply-chain watch items, and regulatory and quarterly timing uncertainties, but management characterized several of these risks as manageable and did not identify a material current business impact.

For fiscal 2027, guidance assumes no additional acquisitions or divestitures and includes Prince & Izant: revenue midpoint is $12.05 billion, up approximately 14% over prior year, with commercial OEM revenue growth in the high single-digit to low double-digit percentage range, commercial aftermarket revenue growth in the high single-digit percentage range, and defense revenue growth in the high single-digit percentage range; EBITDA As Defined midpoint is $6.27 billion, up approximately 13% to the prior year, with an expected margin of around 52%, including approximately 2 full percentage points of dilution related to recent acquisitions, and adjusted EPS midpoint is $47.51. Q1 is expected to have about 10% fewer working days than the following quarters, with Q1 revenue, EBITDA As Defined and EBITDA As Defined margin expected to be lower than the rest of the year. Net interest expense is expected to be about $2.255 billion at a weighted average interest rate of approximately 6.5%, fiscal 2027 GAAP cash and adjusted tax rates are anticipated to be in the range of 22% to 24%, weighted average shares outstanding are expected to be 56.7 million shares, free cash flow is estimated to be around $2.9 billion, and net debt-to-EBITDA is expected to delever by at least a turn to below 5x, assuming no further acquisitions or divestitures and no share purchases or dividends. CapEx is anticipated to be about $380 million, about $100 million above FY '26, with about 70% on new business and productivity-driven projects, payback for cost reduction projects remaining about 2 years, and over 230 new automation projects planned, a 55% increase from fiscal '26.