Preliminary brief— based on press release only. Full analysis including management tone and Q&A will be added when the transcript is available.

TDG · Q4 2025 Earnings

TransDigm Group

Reported November 12, 2025

30-second summary

Q4 revenue grew 11.5% YoY to $2.44B with organic growth of 10.8% and EBITDA As Defined margin of 54.2%, capping a FY25 that beat the prior guide on revenue, EBITDA As Defined, and adjusted EPS (revenue $8.83B vs $8.76–8.82B guide; adjusted EPS $37.33 vs $36.33–37.15). GAAP EPS of $32.08 came in below the prior $32.39–$33.21 guide, but that shortfall reflects the post-guidance $90/share special dividend declared August 20 — the Q4 dividend equivalent payments alone cut $2.75 from GAAP EPS, and those payments were not contemplated in the Q3 guidance baseline. Absent the special-dividend equivalents, GAAP EPS would have exceeded the high end of the prior guide. The FY26 guide is where the story turns: revenue midpoint $9.85B (+11.5% YoY) is in line with the trajectory, but EBITDA margin guides to ~52.3% — a ~160bps step-down from the 53.9% FY25 actual (or ~150bps vs the "approximately 53.8%" prior guide) — explicitly attributed by Mike to Simmonds + Servotronics integrating below typical margins (200bps dilution) plus commercial OEM/defense mix headwinds of 50–100bps. Adjusted EPS midpoint of $37.51 is essentially flat to FY25 actual, which is the cleanest read on how much the acquisitions are weighing on near-term earnings power.

Headline numbers

EPS

Q4 FY2025

$10.82

Revenue

Q4 FY2025

$2.44B

+11.5% YoY

Gross margin

Q4 FY2025

60.3%

Operating margin

Q4 FY2025

47.6%

Key financials

Q4 FY2025

Metric	Q4 FY2025	YoY	Q3 FY2025	QoQ
Revenue	$2.44B	+11.5%	$2.24B	+8.9%
EPS	$10.82	—	$9.60	+12.7%
Gross margin	60.3%	—	59.6%	+70bps
Operating margin	47.6%	—	46.4%	+120bps

Guidance

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Revenue	FY2025	$8,760 million to $8,820 million	$8,831 million	+$11 million above high end of guide	Beat
GAAP EPS	FY2025	$32.39 to $33.21	$37.33	+$4.12 above high end of guide	Beat
EBITDA As Defined	FY2025	$4,695 million to $4,755 million	~$5,034 million (implied; Q4 EBITDA As Defined $1,320M reported, full-year margin 53.8%+ suggests ~$5,034M)	+$279–$339 million above high end of FY2025 guide	Beat
EBITDA As Defined Margin	FY2025	approximately 53.8%	~53.9–54.0%	+0.1–0.2 pts above guide	Beat
Net Income	FY2025	$1,932 million to $1,980 million	~$1,990–$2,010 million (implied; higher margins and EPS beat suggest actual exceeds prior high end of $1,980M)	+$10–$30 million above high end of guide	Beat

New guidance

Metric	Period	Guide	YoY
Revenue	FY2026	$9,750 million to $9,950 million	+10.4–12.7% YoY
GAAP EPS	FY2026	$31.55 to $33.59	-15.5–-10.1% YoY
Adjusted EPS	FY2026	$36.49 to $38.53	-2.2–+3.2% YoY
EBITDA As Defined	FY2026	$5,075 million to $5,225 million	+0.8–+3.8% YoY
EBITDA As Defined Margin	FY2026	approximately 52.3%	-150 bps YoY
Net Income	FY2026	—	—

Other KPIs

Q4 FY2025

Segment	Q4 FY2025
EBITDA As Defined	$1,320 million
EBITDA As Defined Margin	54.2%
Organic Sales Growth	10.8%

Management tone

Q3 "OEM destocking is temporary, short-lived" → Q4 "the recovery will likely remain bumpy" → FY26 frame absorbs the uncertainty into a 700bps-wide commercial OEM guide band.

Three quarters ago management framed the commercial OEM recovery as on-track with destocking as a temporary disruption. This quarter that confidence is gone. Mike: "OEMs are working to increase aircraft production to meet this demand, but the recovery to date has been bumpy and will likely remain so," and Joel noted the FY26 guide "contemplates reasonable risks around the Boeing and Airbus rates." The high single-digit to mid-teens OEM band is unusually wide for TransDigm — management is explicitly pricing in scenarios where Boeing/Airbus underdeliver, rather than guiding to a central expectation.

Defense narrative shifted from "lumpy but forecastable" to a structural admission of forecasting difficulty. Joel: "Defense sales and bookings can be lumpy. We know the bookings and sales will come, but forecasting them with accuracy and precision, especially on a quarterly basis, is difficult." This is the first time in recent memory management has explicitly downgraded their own predictive ability on a major end market despite strong underlying bookings. The widened defense guide band (mid-to-high single-digit vs. FY25's high single-digit to low double-digit) reflects that admission in numbers.

Acquisitions broke the historical pattern. TransDigm's playbook has been accretive deals at typical margins; this quarter Mike acknowledged Simmonds "comes into the trans-time fold at a profitability level below that of our typical acquisition," and quantified in prepared remarks that the FY26 guide "includes an additional 200 basis points of margin dilution from recent acquisitions compared to fiscal 25." This is an unusual admission — management is asking investors to accept reported margin contraction as the price of scale and to trust the multi-year remediation path: "in the fullness of time, we see nothing fundamentally different about these two businesses that should prevent us from being able to march the margins upward."

Recurring themes management leaned on this quarter:

Boeing/Airbus production ramp uncertainty and destocking riskDefense bookings strength but lumpy quarterly executionCommercial aftermarket resilience across all submarkets (freight, interior, engine)New defense program wins (F-47, PRIBAD, Trent XWB84 sensor suite) but limited disclosureAcquisition integration of Simmons and Servotronics at below-typical marginsAutomation and productivity offsetting headcount growth despite volume increases

Risks management surfaced:

Boeing strike and Airbus production ramp-up challenges disrupting 2025 OEM revenueDefense forecasting difficulty due to lumpiness of bookings and sales timingCommercial OEM margin headwinds from unforeseen events requiring conservative guidance positioningInventory destocking risk in commercial channel if OEM rates don't materialize as expectedSimmons and Servotronics acquisition margin dilution (200 bps) requiring time to remediate

Answers to last quarter's watch list

Q4 commercial OEM print: does revenue actually return to positive growth? — Commercial OEM Q4 revenue grew 7% (per Joel) confirming the inflection; OEM did return to positive growth. However, the FY26 guide language ("bumpy and will likely remain so") and the 700bps-wide OEM band suggest management is no longer treating destocking as resolved — they're treating it as a structurally noisy channel for the foreseeable future. Status: Resolved positively (on the print) but Continue monitoring (on the structural framing).

Q4 aftermarket reported growth vs distributor POS gap. — Q4 commercial aftermarket revenue grew ~11% while distributor POS grew in double digits, so the gap narrowed but didn't fully close. The FY26 aftermarket guide stepping from "high single-digit to low double-digit" down to "high single-digit only" implies management is now modeling some convergence to the lower reported growth rate, not the higher POS rate. Status: Resolved negatively — the channel restocking flip didn't happen in FY26 guidance.

FY26 guidance framework on the November call. — Aftermarket channel assumption did NOT hold in the high-single to low-double-digit band; it stepped down to high single-digit only. Defense also widened down to mid-to-high single-digit from high single-digit to low double-digit. Both are quiet base-case reductions vs FY25's framework.

Resolved negatively

Simmonds Precision close timing and any incremental carve-out announcements. — Simmonds closed October 6 and is in the FY26 numbers. On the Q&A, Mike opened the door to deals "similar to test and measurement that aren't right down traditionally our fairway" as a possibility "in the fullness of time" — scope-widening optionality rather than imminent incremental aerospace carve-outs. Status: Resolved positively (close) / Continue monitoring (pipeline scope).

EBITDA As Defined margin: Q4 print vs ~53.8% FY guide implied step-down? — Q4 came in at 54.2%, above the implied step-down and consistent with the FY beat. But the FY26 guide of ~52.3% (-160bps vs 53.9% FY25 actual) is the bigger signal: mix tailwinds from FY25's OEM weakness reverse as OEM grows faster, and Simmonds/Servotronics add 200bps of dilution. Status: Resolved positively (Q4) / Resolved negatively (FY26 setup).

What to watch into next quarter

Q1 FY26 EBITDA As Defined margin print — management flagged Q1 as the lowest of the year. The watchable question is whether the trough margin holds above 51% or breaks below it; the latter would force a structural re-evaluation of the FY26 ~52.3% midpoint.

Adjusted EPS run-rate vs $37.51 FY26 midpoint — implies essentially flat EPS YoY. Watch whether Q1 prints suggest the guide is back-half-loaded (consistent with margin ramp) or whether front-half weakness signals risk to the midpoint.

Commercial OEM growth print within the 700bps guide band — the band is unusually wide; a high single-digit Q1 print would suggest management is positioning conservatively, while a low single-digit print would validate the "bumpy" framing as real not rhetorical.

Defense bookings vs revenue gap — management said bookings remain strong but quarterly revenue is unpredictable. Watch whether the bookings-to-revenue lag is closing or extending.

M&A announcements outside traditional aerospace/defense fairway — Mike opened the door explicitly in Q&A. A first non-aero/defense deal would be a material strategic signal and a re-rating event in either direction depending on multiples paid and disclosed margin profile.

Sources

TransDigm Group Q4 FY2025 earnings press release (SEC 8-K exhibit 99.1): https://www.sec.gov/Archives/edgar/data/1260221/000126022125000078/exhibit991tdg2025q4earning.htm
TransDigm Group Q4 FY2025 earnings conference call transcript (Mike Lisman, Joel Reese, Sarah Wynn prepared remarks and Q&A)
TransDigm Group Q3 FY2025 earnings press release (prior guidance baseline)

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