Key Highlights

  • Fiscal 2026 net sales were USD 10,557 million, up 19.5% from USD 8,831 million, with Organic Sales up 11.3% to USD 9,832 million and acquisitions adding USD 725 million.
  • GAAP Earnings Per Share were USD 35.51 against USD 32.08, as Net Income attributable to the company edged up to USD 2,107 million from USD 2,074 million.
  • EBITDA As Defined, a non-GAAP measure, rose to USD 5,563 million, but its Margin slipped to 52.7% from 53.9%, and gross margin eased to 59.2% from 60.1%.
  • Management guided fiscal 2027 to a Revenue midpoint of USD 12.05 billion, EBITDA As Defined of USD 6.27 billion and adjusted earnings per share of USD 47.51.

Acquisitions Add Sales but Dilute the Margin

TransDigm Group (NYSE:TDG) filed its Annual Report for the fiscal year ended September 30, 2026 on November 10, 2026, and held its fourth-quarter call the same day. Organic sales rose about USD 1,000 million, driven by defense up roughly 10%, commercial aftermarket up roughly 13% and commercial OEM up roughly 14%. The filing attributes the lower gross margin of 59.2% mainly to the dilutive effect of fiscal 2026 acquisitions, partly offset by a favorable mix toward aftermarket. Management said recent acquisitions cost about 2 points of EBITDA margin, and the fourth-quarter margin of 53% was the highest of the year.

Interest Costs of USD 2,008 Million Cap the Earnings Gain

Income from operations grew to USD 4,811 million from USD 4,165 million, but net interest expense rose to USD 2,008 million from USD 1,572 million, so net income barely moved. Net income applicable to common stockholders was USD 2,048 million after USD 59 million of Dividend equivalents on participating securities. On the call, management said net Debt to EBITDA ended the year at 5.9 times, gross debt was about USD 35 billion with roughly 75% fixed or hedged through fiscal 2029, and cash was nearly USD 2.3 billion. It expects fiscal 2027 net interest expense of about USD 2.255 billion.

Record Buybacks, USD 4.4 Billion of Deals and the Right-to-Repair Question

Management said it repurchased about 2.3 million shares at an average of USD 1,187 for USD 2.75 billion in fiscal 2026, including about USD 940 million in the fourth quarter, and deployed about USD 4.4 billion on acquisitions. The filing shows no cash dividends declared in fiscal 2026 versus USD 90.00 per share a year earlier. Management said pending right-to-repair provisions should not be material, estimating that less than 1% of sales could be affected. Other watch items it named were Middle East conflict effects on air travel, printed wire board lead times and rare earth sourcing.

Where Things Stand

Because purchase accounting and mix worked against it. TransDigm Group (NYSE:TDG) grew sales 19.5%, but acquired businesses carry lower margins, so EBITDA As Defined margin fell 1.2 points to 52.7% on a calculated basis, and interest expense absorbed much of the extra operating profit. Management said the margin dilution should ease as acquisitions mature. Its fiscal 2027 outlook assumes about 14% revenue growth at the midpoint and a margin near 52%, excluding future deals. Next markers are first-quarter results, which have about 10% fewer working days, and the pace of Buybacks versus debt reduction.