Please see the tables and related footnotes in the earnings release for a presentation of the most directly comparable GAAP measures and applicable reconciliations. Second, make a few comments about the quarter, and third, discuss our fiscal 2026 outlook. Most of our EBITDA comes from aftermarket revenues, which generally have significantly higher margins and over any extended period, have typically provided relative stability in the downturns. And lastly, our capital structure and allocation are a key part of our value creation methodology.
To do this, we stay focused on both the details of value creation as well as careful allocation of our capital. As you saw from our earnings release, we had a good start to our fiscal year. Our Q1 results ran ahead of our expectations, and we raised our sales and EBITDA as defined guidance for the year. During the quarter, we saw solid growth in the revenue for our commercial OEM channel and healthy growth in both our commercial aftermarket and defense market channels.
Within commercial aftermarket, a quick note on our growth in this market channel over the last 12 months. While our growth rates have hit and continue to hit our own expectations, there is a lag in TransDigm's growth versus the broader market of probably 5-6 percentage points. Airline demand for new aircraft remains high, and the OEMs have long backlogs. Our EBITDA as defined margin was 52.4% in the quarter, which includes about 2 full percentage points of dilution from recent acquisitions.
| Metric | Period | Current guidance |
|---|---|---|
| Sales / revenue guidance | FY2026 | raised (up) |
| EBITDA as defined guidance | FY2026 | raised (up) |
| Commercial OEM revenue growth | FY2026 | high single-digit to mid-teens % (unchanged) |
| Commercial aftermarket revenue growth | FY2026 | high single-digit % (unchanged) |
| Defense revenue growth | FY2026 | mid-single to high single-digit % (unchanged) |
| Free cash flow | FY2026 | ~$2.4B (unchanged) |
| Metric | YoY | Note |
|---|---|---|
| Organic growth rate | +7.4% | All market channels contributed; non-aero segment ran below average |
| Commercial OEM revenue (pro forma) | +17% | Higher Boeing/Airbus build rates and bounce-back from prior-year Boeing production disruption |
| Commercial transport OEM revenue | +18% | Airbus and Boeing rate increases plus prior-year strike comparison |
| Commercial aftermarket revenue (pro forma) | +7% | All submarkets positive but distributor lumpiness and engine underexposure capped growth |
| Commercial transport aftermarket | +8% | Solid growth across freight, interiors, engine, and passenger |
| Defense market revenue (pro forma) | +7% | New business wins and global defense spending; OEM slightly ahead of aftermarket |
| EBITDA as defined margin | 52.4% | Mix tailwind and op-unit cost/productivity, despite ~2 pts of acquisition dilution |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Commercial OEM ramp | Bumpy, prior-year Boeing disruption | Steady Boeing/Airbus ramp; destock believed complete | Improving |
| Aftermarket vs. market growth gap | Has happened in brief periods before | Lagging market ~5-6 pts on engine mix and channel lumpiness | Headwind, expected to turn |
| Distributor inventory | 1-2 pt drag in FY2025 | Slightly more elevated drag in Q1; POS up double digits | Headwind expected to become tailwind |
| M&A / capital deployment | Ongoing small/mid-size focus | Three deals signed in five weeks (~$3.2B); PMA expansion | Active |
| Defense demand | Strong growth, lumpy | Robust bookings well above sales; backlog building | Improving |