Transdigm Group Incorporated

Q2 performance beat expectations; guidance raised again - Company reported solid Q2 results with EBITDA as defined margin of 52.6% (driven by commercial aftermarket growth, operating discipline, and faster-than-expected margin improvement at recent acquisitions). - Bookings materially surpassed shipments across commercial OEM, commercial aftermarket, and defense. - Revised full-year fiscal 2026 guidance upward: - Sales midpoint raised by ~$420M. - EBITDA as defined midpoint raised by ~$210M (midpoint now ~$5.42B, ~+14% YoY, ~52.3% margin expected). - Adjusted EPS midpoint raised; now expected at $39.52. - Revenue midpoint now ~$10.36B (~+17% YoY).

Market demand backdrop: strong but more uncertain due to Middle East conflict - Through February, commercial aerospace trends favorable: takeoffs/landings ~+4% YoY and RPM growth ~4%–7% (within their stated range). - In March/April, activity stepped back due to the Middle East conflict: - March RPM growth ~2.1% (but excluding Middle East impact, March RPM growth ~8%). - Importantly, company has *not* seen meaningful negative impact yet in aftermarket ordering/activity vs pre-conflict levels, and commercial aftermarket guidance was still increased despite uncertainty. - They frame the aftermarket risk as a lagging effect of fuel price/availability and emphasize they’re watchful for second-half changes.

Commercial aftermarket: rebounded strongly; engine/passenger leading; inventory/destocking concerns seem less relevant - Commercial aftermarket Q2 revenue: ~+14% YoY (all sub-markets positive). - Key sub-markets called out: engine and passenger were strongest; not characterized as a “one-off” inventory normalization. - Distributor POS (point of sale) grew in double digits, and Q2 bookings outpaced sales, supporting a stronger full-year view. - Commercial aftermarket full-year guidance raised to high single-digit to low double-digit growth (they mentioned “glamorous” high-single-digit/low-double-digit range). - On the “destocking” bear thesis: they said distribution channel inventory wasn’t a major problem, and they’re seeing no strong evidence of channel-headwind.