TransDigm(TDG) - 2026 Q1 - Quarterly Report

Financial Performance - Net sales for the thirteen-week period ended December 27, 2025, were $2,285 million, a 13.9% increase from $2,006 million in the same period last year[10] - Gross profit increased to $1,352 million, up 9.5% from $1,235 million year-over-year[10] - Net income attributable to TD Group was $445 million, a decrease of 9.8% compared to $493 million in the prior year[10] - Earnings per share attributable to TD Group common stockholders decreased to $6.62 from $7.62, reflecting a 13.1% decline[10] - Total segment EBITDA for the same period was $1,221 million, compared to $1,113 million in the prior year, reflecting an increase of about 9.7%[78] - Income from continuing operations before income taxes for the thirteen-week period was $572 million, down from $619 million year-over-year, a decrease of approximately 7.6%[10] Cash Flow and Investments - Net cash provided by operating activities was $832 million, an increase of 10.7% from $752 million in the same period last year[14] - The company reported a net cash used in investing activities of $973 million, significantly higher than $24 million in the prior year, primarily due to acquisitions[14] - Capital expenditures for the period were $60 million, compared to $42 million in the prior year, reflecting ongoing investment in growth[14] - The company recognized stock-based compensation expense of $28 million for the thirteen-week period ended December 27, 2025, compared to $35 million in the prior year, a decrease of 20%[14] Acquisitions - The Company entered into a definitive agreement to acquire Jet Parts Engineering and Victor Sierra Aviation Holdings for approximately $2.2 billion in cash, expected to be financed using existing cash and additional debt capacity[22] - The acquisition of Stellant Systems, Inc. was agreed upon for approximately $960 million in cash, also to be financed through existing cash and additional debt capacity[26] - The Company completed the acquisition of Simmonds Precision Products, Inc. for approximately $757 million in cash, financed through existing cash on hand[29] - For the thirteen-week period ended December 27, 2025, the Company completed several acquisitions for a total aggregate purchase price of $151 million in cash, financed through existing cash on hand[33] Assets and Liabilities - As of December 27, 2025, total assets were $23,757 million, an increase from $22,909 million as of September 30, 2025, representing a growth of approximately 3.7%[79] - The company’s total debt as of December 27, 2025, was $29,322 million, with a current portion of $125 million[56] - Total inventories increased to $2,373 million from $2,095 million as of September 30, 2025, with raw materials and purchased component parts at $1,458 million[53] - Goodwill increased to $11,075 million as of December 27, 2025, from $10,612 million at the end of the previous quarter, with $449 million in goodwill acquired during the period[54] Tax and Regulatory Matters - The effective income tax rate for the thirteen-week period ended December 27, 2025, was 22.2%, up from 20.4% in the same period last year, primarily due to a less significant benefit associated with share-based payments[58] - The company reported unrecognized tax benefits as not material as of December 27, 2025[60] - The company is currently under examination for its federal income taxes in Canada, France, and Germany for various fiscal years[59] Risk Management - The company has entered into interest rate collar agreements with a notional amount of $2,750 million to manage interest rate risk, establishing a floor and ceiling for the three-month Term SOFR rate[69] - The company’s risk management program utilizes derivative financial instruments to hedge against foreign currency and interest rate risks, without entering into transactions for trading purposes[66] - The company has outstanding foreign currency forward exchange contracts to sell U.S. dollars with notional amounts of $89 million, with a maximum duration of nine months[73] Stock Repurchase - The company repurchased 85,212 shares of common stock at an average price of $1,249.73 per share, totaling $106 million, with $5,681 million remaining available for repurchase under the existing stock repurchase program[52][51] - The company has authorized an additional $5.0 billion in share repurchases under its existing stock repurchase program, which has no expiration date[51] Segment Reporting - The Company adopted ASU 2023-07 for segment reporting, which expands disclosures about reportable segments and is effective for annual periods beginning after December 15, 2023[19] - The company’s segments are organized into Power & Control, Airframe, and Non-aviation, with performance evaluated using EBITDA As Defined[74]