TransDigm (TDG) Q1 2026 Earnings Call Transcript

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Tuesday, Feb. 3, 2026 astatine 11 a.m. ET

• Chief Executive Officer — Michael Lisman

• Co-Chief Operating Officer — Patrick Murphy

• Chief Financial Officer — Sarah Wynne

• Director of Investor Relations — Jaimie Stemen

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Michael Lisman: Good morning, and acknowledgment for calling successful today. First, I'll commencement disconnected with the accustomed speedy overview of our strategy. Second, marque a fewer comments astir the quarter; and third, sermon our fiscal '26 outlook. Then Patrick and Sarah volition springiness immoderate further colour connected the quarter. This volition beryllium the archetypal clip you're proceeding from our caller co-COO, Patrick Murphy, but he's hardly a caller feline astir TransDigm, having served arsenic an Executive Vice President for the past 6 years, and arsenic President astatine our HarcoSemco operating portion successful Connecticut anterior to that.

To reiterate, we judge we are unsocial successful the manufacture successful some the consistency of our strategy, successful some bully times and bad, arsenic good arsenic our dependable absorption connected intrinsic shareholder worth instauration done each phases of the aerospace cycle. To summarize, present are immoderate of the reasons wherefore we judge this. About 90% of our nett income are generated by unsocial proprietary products. Most of our EBITDA comes from aftermarket revenues, which mostly has importantly higher margins and implicit immoderate extended play person typically provided comparative stableness successful the downturns. We travel a accordant semipermanent strategy. First, we ain and run proprietary aerospace businesses with important aftermarket content. Second, we utilize a simple, well-proven, value-based operating methodology.

Third, we person a decentralized organizational operation and unsocial compensation strategy intimately aligned with our shareholders. Fourth, we get businesses that acceptable this strategy and wherever we spot a wide way to backstage equity-like returns. And lastly, our superior operation and allocation are a cardinal portion of our worth instauration methodology. Our long-standing extremity is to springiness our shareholders backstage equity-like returns with the liquidity of a nationalist market. To bash this, we enactment focused connected some the details of worth creation, arsenic good arsenic cautious allocation of our capital. As you saw from our net release, we had a bully commencement to our fiscal year.

Our Q1 results ran up of our expectations, and we raised our income and EBITDA defined guidance for the year. During the quarter, we saw coagulated maturation successful the gross for our commercialized OEM channel, and steadfast maturation successful some our commercialized aftermarket and defence marketplace channels. Bookings successful the 4th were beardown crossed each of these 3 marketplace channels. Commercial aerospace trends remained favorable. Air postulation continues to steadily grow, and hose schedules stay reasonably unchangeable arsenic good with takeoffs and landings increasing successful the 4% ballpark year-over-year. Within commercialized aftermarket, a speedy enactment connected our maturation successful this marketplace transmission implicit the past 12 months.