TDG

Industrials

TransDigm Group

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Market Data

Financials

XBRL · SEC EDGAR

2008–2025(18yr)

Revenue

Net Income

Free CF

Metric	FY 2008	FY 2009	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014	FY 2015	FY 2016	FY 2017	FY 2018	FY 2019	FY 2020	FY 2021	FY 2022	FY 2023	FY 2024	FY 2025Latest	YoY
Revenue	$713.7M	$761.6M	$827.7M	$1.2B	$1.7B	$1.9B	$2.4B	$2.7B	$3.2B	$3.5B	$3.8B	$5.2B	$5.1B	$4.8B	$5.4B	$6.6B	$7.9B	$8.8B	+11.2%
Gross Profit	$385.9M	$429.3M	$473.1M	$661.2M	$945.7M	$1.0B	$1.3B	$1.4B	$1.7B	$2.0B	$2.2B	$2.8B	$2.6B	$2.5B	$3.1B	$3.8B	$4.7B	$5.3B	+13.7%
Gross Margin	54.1%	56.4%	57.2%	54.8%	55.6%	54.5%	53.4%	53.6%	54.5%	56.6%	57.1%	53.8%	51.9%	52.4%	57.1%	58.3%	58.8%	60.1%	+1.3pp
Operating Income	$299.3M	$335.4M	$363.1M	$487.1M	$699.8M	$749.5M	$927.8M	$1.1B	$1.3B	$1.5B	$1.7B	$1.9B	$1.8B	$1.7B	$2.2B	$2.9B	$3.5B	$4.2B	+18.0%
Operating Margin	41.9%	44.0%	43.9%	40.4%	41.2%	38.9%	39.1%	39.7%	40.0%	42.2%	43.4%	36.9%	34.3%	35.2%	40.8%	44.4%	44.5%	47.2%	+2.7pp
Net Income	$133.1M	$162.9M	$163.4M	$172.1M	$325.0M	$302.8M	$306.9M	$447.2M	$586.4M	$596.9M	$957.1M	$889.8M	$699.0M	$680.0M	$866.0M	$1.3B	$1.7B	$2.1B	+21.0%
Net Margin	18.7%	21.4%	19.7%	14.3%	19.1%	15.7%	12.9%	16.5%	18.5%	17.0%	25.1%	17.0%	13.7%	14.2%	16.0%	19.7%	21.6%	23.5%	+1.9pp
Free Cash Flow	$178.8M	$184.0M	$184.4M	$242.6M	$388.6M	$434.7M	—	—	—	$717.7M	$948.8M	$913.9M	$1.1B	$808.0M	$829.0M	$1.2B	$1.9B	$1.8B	-3.4%
FCF Margin	25.0%	24.2%	22.3%	20.1%	22.9%	22.6%	—	—	—	20.5%	24.9%	17.5%	21.7%	16.8%	15.3%	18.8%	23.7%	20.6%	-3.1pp
EPS (Diluted)	—	—	$3.27	$3.39	$6.23	—	$5.82	$8.42	$11.00	$11.37	$18.28	$16.76	$8.96	$10.41	$13.40	$22.03	$25.62	$32.08	+25.2%

Total Debt$29.3B

Cash & Equiv.$2.8B

Net Debt$26.5B

3 min read

1. THE BIG PICTURE

TransDigm operates as a high-margin specialist in the aerospace industry, where 90% of its revenue comes from proprietary parts that customers are legally and technically required to use for decades (10-K Item 1). This structural lock-in allows TransDigm Group to maintain industry-leading 46.6% operating margins, but this profitability is essentially "pre-spent" to service a $26.9 billion debt pile (XBRL).

2. WHERE THE RISKS HIT HARDEST

Proprietary lock-in is threatened by customer concentration because the advantage of being a sole-source provider for 25-to-30-year aircraft lifecycles is undermined by a base where the top ten customers control 40% of sales (10-K Item 1A). A production cut by a major manufacturer could starve the cash flow required to service variable-rate debt.
Value-based pricing is threatened by fixed-price contract exposure because TransDigm’s strategy of pricing products to reflect customer value is restricted by contracts that do not allow for the recovery of labor or raw material cost overruns (10-K Item 1A).
Acquisition-led growth is threatened by margin dilution because the strategy of buying proprietary businesses requires seamless integration to avoid the significant goodwill impairment charges that could occur if new units fail to meet TransDigm’s high margin standards (10-K Item 1A).

3. WHAT THE NUMBERS SAY TOGETHER

TransDigm’s financial profile is an anomaly in the aerospace sector: it generates the highest margins in its peer group—including a 24.7% FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders margin—despite being significantly smaller by revenue than giants like RTX or Lockheed Martin (XBRL). While net income fell to $445 million in the most recent quarter from $493 million a year prior, this was largely due to acquisition-related dilution; management notes that base business EBITDAEBITDAEarnings Before Interest, Taxes, Depreciation & Amortization — a rough proxy for operating cash profit, stripping out accounting adjustments margins actually improved (8-K). The 13.9% revenue growth in the latest quarter exceeds the TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter growth of 11.2%, suggesting an acceleration driven by a recovery in commercial OEM production and strong international air travel demand (10-Q).

4. IS IT WORTH IT AT THIS PRICE?

At 27.6x Forward P/EP/EPrice-to-Earnings ratio — share price divided by annual earnings per share; how much investors pay per dollar of profit. Higher P/E = higher growth expectations, TransDigm is priced exactly in line with the peer median (Yahoo Finance). At this multiple, the market is pricing in approximately 5.9% long-term growth (CAPM analysis). This seems grounded in reality given TransDigm Group’s 11.2% TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter revenue growth and its 24.7% FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders margin, which is the highest among its peers. However, the 12.6x net leverage ratio is a significant outlier compared to the broader peer group. If growth were to slow to 5.0%, the justified multiple would drop to 22.0x, representing a roughly 20% downside (CAPM analysis). The lack of a dividend and a low 0.8% buyback yield further indicate that capital is being prioritized for debt service and acquisitions rather than immediate cash returns to shareholders.

5. WHAT WOULD CHANGE THIS VIEW?

Cautious if net leverage continues to climb above 12.6x without a corresponding increase in FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders margin, signaling that debt costs are outpacing cash generation.
Constructive if commercial OEM production rates at major customers stabilize, reducing the volatility seen in the Airframe segment, which grew at a slower 7.9% compared to the Power & Control segment's 19.2% (10-Q).
Cautious if operating margins contract below 40%, suggesting that fixed-price contract costs are outstripping the gains from value-based pricing.

6. BOTTOM LINE

Structural Advantage: High switching costs and regulatory barriers surrounding a 90% proprietary product portfolio with a 50-year lifecycle.

Bottom Line: TransDigm is a high-performance margin engine currently weighed down by a massive debt load that requires perfect execution of its acquisition strategy to justify its valuation.

Source: Synthesis · LLM Analysis

4 min read

1. Top 5 Material Risks

Indebtedness: TransDigm Group carries a significant amount of debt, including variable-rate term loans and notes, which requires substantial cash flow to service. A failure to meet these obligations or a breach of restrictive covenants could lead to default, acceleration of debt, or the loss of collateral.
Customer Concentration: While no single customer accounted for 10% or more of net sales in fiscal 2025, the top ten customers collectively represented approximately 40% of net sales. A material reduction in purchasing by these entities could adversely affect cash flows and financial position.
Acquisition Strategy: Growth is partially dependent on the ability to identify and acquire suitable companies. Risks include the inability to find candidates at favorable prices, the failure to integrate operations, and the potential for significant charges related to goodwill, intangible assets, and integration costs.
Fixed-Price Contract Exposure: Many contracts are fixed-price, meaning TransDigm Group bears the risk of cost overruns for raw materials, labor, or design delays. This risk is heightened in inflationary environments, as most contracts do not permit the recovery of increased costs.
Cyclicality of Aerospace: Sales to aircraft manufacturers are cyclical and sensitive to airline profitability, which is influenced by fuel costs, interest rates, and global economic conditions. Downturns in these areas directly impact TransDigm Group's results of operations.

2. Company-Specific Risks

Lack of Guaranteed Sales: TransDigm Group generally lacks long-term contracts with aftermarket customers and faces short-notice termination risks with many OEM customers, meaning future sales volumes are not guaranteed.
Workforce Competition: TransDigm Group relies on a highly trained workforce to produce complex, engineered products; intense competition for skilled labor in the aerospace industry could lead to wage pressures or an inability to fill vacancies.
Cybersecurity and Data Security: Despite the use of isolated systems by operating units, TransDigm Group faces risks from cyber-attacks, ransomware, and data breaches that could disrupt operations or lead to the loss of proprietary information.
Product Liability: As a manufacturer of highly engineered aircraft components, TransDigm Group faces potential liabilities for personal injury or death; insurance coverage may be inadequate or unavailable at acceptable costs.

3. Regulatory/Legal Risks

U.S. Government Contracting: As a supplier to the U.S. Government, TransDigm Group is subject to audits of contract-related costs and pricing. The government may unilaterally terminate contracts for convenience, debar TransDigm Group from new contracts, or require pricing based on audited costs plus a nominal fee.
Environmental Liabilities: TransDigm Group is involved in the investigation and remediation of several sites identified under federal superfund laws and comparable state laws, which may require future adjustments to accruals.
Export Controls: Operations are subject to strict regulations including the Arms Export Control Act, ITAR, and EAR. Failure to obtain necessary export approvals or licenses could restrict the ability to sell products outside the United States.
Data Protection Laws: TransDigm Group must comply with evolving global data protection laws, such as the GDPR. Inconsistent interpretations or failure to comply could result in significant fines and reputational harm.

4. Financial Impact Map

Indebtedness → Cash Flows from Operations → Requires significant cash to service principal and interest, reducing funds available for R&DR&DResearch & Development — spending on creating new products or technologies and capital expenditures. Customer Concentration → Net Sales → A material reduction in purchasing by top-tier customers would directly lower total revenue. Acquisition Strategy → Goodwill and Intangible Assets → Potential for periodic impairment charges if acquired businesses do not perform to expectations. Fixed-Price Contracts → Operating Margin → Cost overruns in raw materials or labor directly reduce profitability as these costs cannot be passed to customers. Cyclicality of Aerospace → Accounts Receivable and Cash Flow → Reduced demand for spare parts during industry downturns impacts the collection of receivables and expected cash generation.

Source: 10-K Item 1A · LLM Analysis

Recent Filings

Form	Filed	Period
8-K	Feb 2026	—
10-Q	Feb 2026	Dec 2025
14A	Jan 2026	—
10-K	Nov 2025	Sep 2025