SEC Form 10-Q filed by Transdigm Group Incorporated

2/3/26 5:00:41 PM ET

$TDG

Military/Government/Technical

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended December 27, 2025


☐			Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number 001-32833

TransDigm Group Incorporated

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

41-2101738

(I.R.S. Employer Identification No.)

1350 Euclid Avenue,

Suite 1600,

Cleveland,

Ohio

44115

(Address of principal executive offices)

(Zip Code)

(216) 706-2960

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, accelerated filer, non-accelerated filer, smaller reporting company or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-Accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

Trading Symbol:

Name of each exchange on which registered:

Common Stock, $0.01 par value

TDG

New York Stock Exchange

The number of shares outstanding of TransDigm Group Incorporated’s common stock, par value $.01 per share, was 56,473,563 as of January 30, 2026.

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TABLE OF CONTENTS

Page

PART I

FINANCIAL INFORMATION

ITEM 1

Financial Statements

Condensed Consolidated Balance Sheets – December 27, 2025 and September 30, 2025

Condensed Consolidated Statements of Income – Thirteen Week Periods Ended December 27, 2025 and December 28, 2024

Condensed Consolidated Statements of Comprehensive Income – Thirteen Week Periods Ended December 27, 2025 and December 28, 2024

Condensed Consolidated Statements of Changes in Stockholders’ Deficit – Thirteen Week Periods Ended December 27, 2025 and December 28, 2024

Condensed Consolidated Statements of Cash Flows – Thirteen Week Periods Ended December 27, 2025 and December 28, 2024

Notes to Condensed Consolidated Financial Statements

ITEM 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

ITEM 3

Quantitative and Qualitative Disclosure About Market Risk

ITEM 4

Controls and Procedures

PART II

OTHER INFORMATION

ITEM 1

Legal Proceedings

ITEM 1A

Risk Factors

ITEM 2

Unregistered Sales of Equity Securities and Use of Proceeds: Purchases of Equity Securities by the Issuer

ITEM 5

Other Information

ITEM 6

Exhibits

SIGNATURES

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PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TRANSDIGM GROUP INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in millions, except share amounts)

(Unaudited)


	December 27, 2025		September 30, 2025
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	2,528	$	2,808
Trade accounts receivable—Net	1,564		1,617
Inventories—Net	2,373		2,095
Prepaid expenses and other	506		492
Total current assets	6,971		7,012
PROPERTY, PLANT AND EQUIPMENT—NET	1,653		1,579
GOODWILL	11,075		10,612
OTHER INTANGIBLE ASSETS—NET	3,783		3,454
OTHER NON-CURRENT ASSETS	275		252
TOTAL ASSETS	$	23,757	$	22,909

LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Current portion of long-term debt	$	125	$	124
Short-term borrowings—trade receivable securitization facility	724		724
Accounts payable	385		368
Accrued and other current liabilities	1,301		966
Total current liabilities	2,535		2,182
LONG-TERM DEBT	29,197		29,167
DEFERRED INCOME TAXES	721		759
OTHER NON-CURRENT LIABILITIES	567		480
Total liabilities	33,020		32,588
TD GROUP STOCKHOLDERS’ DEFICIT:
Common stock - $.01 par value; authorized 224,400,000 shares; issued 62,573,115 and 62,465,317 at December 27, 2025 and September 30, 2025, respectively	1		1
Additional paid-in capital	3,187		3,135
Accumulated deficit	(10,168)		(10,606)
Accumulated other comprehensive income (loss)	22		(10)
Treasury stock, at cost; 6,174,887 and 6,089,675 shares at December 27, 2025 and September 30, 2025, respectively	(2,312)		(2,206)
Total TD Group stockholders’ deficit	(9,270)		(9,686)
NONCONTROLLING INTERESTS	7		7
Total stockholders’ deficit	(9,263)		(9,679)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	23,757	$	22,909

See notes to condensed consolidated financial statements

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TRANSDIGM GROUP INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in millions, except per share amounts)

(Unaudited)


	Thirteen Week Periods Ended
		December 27, 2025		December 28, 2024
NET SALES		$	2,285	$	2,006
COST OF SALES		933		771
GROSS PROFIT		1,352		1,235
SELLING AND ADMINISTRATIVE EXPENSES		254		211
AMORTIZATION OF INTANGIBLE ASSETS		56		50
INCOME FROM OPERATIONS		1,042		974
INTEREST EXPENSE—NET		475		378

OTHER INCOME		(5)		(23)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		572		619
INCOME TAX PROVISION		127		126


NET INCOME		445		493
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		—		—
NET INCOME ATTRIBUTABLE TO TD GROUP		$	445	$	493
NET INCOME APPLICABLE TO TD GROUP COMMON STOCKHOLDERS		$	386	$	444
Earnings per share attributable to TD Group common stockholders:


Earnings per share		$	6.62	$	7.62

Weighted-average shares outstanding:
Basic and diluted		58.2		58.3

See notes to condensed consolidated financial statements

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TRANSDIGM GROUP INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in millions)

(Unaudited)


	Thirteen Week Periods Ended
		December 27, 2025		December 28, 2024
Net income		$	445	$	493
Less: Net income attributable to noncontrolling interests		—		—
Net income attributable to TD Group		$	445	$	493
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment		26		(227)
Unrealized gains on derivatives		6		22
Pension and post-retirement benefit plans adjustment		—		—
Other comprehensive income (loss), net of tax, attributable to TD Group		32		(205)
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO TD GROUP		$	477	$	288

See notes to condensed consolidated financial statements

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TRANSDIGM GROUP INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(Amounts in millions, except share amounts)

(Unaudited)


	TD Group Stockholders
	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Treasury Stock
	Number of Shares	Par Value								Number of Shares	Value		Noncontrolling Interests		Total
BALANCE—September 30, 2024	61,904,833	$	1	$	2,819	$	(7,362)	$	(42)	(5,688,639)	$	(1,706)	$	7	$	(6,283)
Accrued unvested dividend equivalents and other	—	—		—		(8)		—		—	—		—		(8)
Compensation expense recognized for employee stock options	—	—		33		—		—		—	—		—		33
Stock-based compensation activity	118,080	—		35		—		—		—	—		—		35
Stock repurchases under repurchase program	—	—		—		—		—		(252,800)	(316)		—		(316)
Net income attributable to TD Group	—	—		—		493		—		—	—		—		493
Foreign currency translation adjustment, net of tax	—	—		—		—		(227)		—	—		—		(227)
Unrealized gain on derivatives, net of tax	—	—		—		—		22		—	—		—		22
Pension and postretirement benefit plans adjustment, net of tax	—	—		—		—		—		—	—		—		—
BALANCE—December 28, 2024	62,022,913	$	1	$	2,887	$	(6,877)	$	(247)	(5,941,439)	$	(2,022)	$	7	$	(6,251)


	TD Group Stockholders
	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income		Treasury Stock
	Number of Shares	Par Value								Number of Shares	Value		Noncontrolling Interests		Total
BALANCE—September 30, 2025	62,465,317	$	1	$	3,135	$	(10,606)	$	(10)	(6,089,675)	$	(2,206)	$	7	$	(9,679)

Accrued unvested dividend equivalents and other	—	—		—		(7)		—		—	—		—		(7)
Compensation expense recognized for employee stock options	—	—		24		—		—		—	—		—		24
Stock-based compensation activity	107,798	—		28		—		—		—	—		—		28
Stock repurchases under repurchase program	—	—		—		—		—		(85,212)	(106)		—		(106)
Net income attributable to TD Group	—	—		—		445		—		—	—		—		445
Foreign currency translation adjustment, net of tax	—	—		—		—		26		—	—		—		26
Unrealized gain on derivatives, net of tax	—	—		—		—		6		—	—		—		6
Pension and postretirement benefit plans adjustment, net of tax	—	—		—		—		—		—	—		—		—
BALANCE—December 27, 2025	62,573,115	$	1	$	3,187	$	(10,168)	$	22	(6,174,887)	$	(2,312)	$	7	$	(9,263)

See notes to condensed consolidated financial statements

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TRANSDIGM GROUP INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in millions)

(Unaudited)


	Thirteen Week Periods Ended
	December 27, 2025		December 28, 2024
OPERATING ACTIVITIES:
Net income	$	445	$	493

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	44		40
Amortization of intangible assets and product certification costs	56		50
Amortization of debt issuance costs and original issue discount	11		9



Gain on sale of businesses, net	—		(19)
Non-cash stock and deferred compensation expense	27		25
Deferred income taxes	(1)		(2)




Changes in assets/liabilities, net of effects from acquisitions and sales of businesses:
Trade accounts receivable	94		80
Inventories	(96)		(72)
Income taxes payable	70		91
Other assets	(16)		(2)
Accounts payable	(25)		(3)
Accrued interest	270		201
Accrued and other liabilities	(47)		(139)
Net cash provided by operating activities	832		752
INVESTING ACTIVITIES:
Capital expenditures	(60)		(42)
Acquisition of businesses, net of cash acquired	(907)		(29)

Other investing transactions, net	(6)		47
Net cash used in investing activities	(973)		(24)
FINANCING ACTIVITIES:
Proceeds from exercise of stock options	29		35
Dividends and dividend equivalent payments	(59)		(4,396)
Repurchases of common stock	(106)		(316)







Proceeds from trade receivable securitization facility, net	—		163

Financing costs and other, net	(5)		(2)
Net cash used in financing activities	(141)		(4,516)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	2		(14)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(280)		(3,802)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	2,808		6,261
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	2,528	$	2,459
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest, net	$	185	$	162
Cash paid during the period for income taxes, net of refunds	$	58	$	37

See notes to condensed consolidated financial statements

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TRANSDIGM GROUP INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THIRTEEN WEEK PERIODS ENDED DECEMBER 27, 2025 AND DECEMBER 28, 2024

(UNAUDITED)

1. BASIS OF PRESENTATION

As used in this Quarterly Report on Form 10-Q, unless the context otherwise indicates, the terms “the Company,” “TD Group,” “TransDigm,” “we,” “us,” “our,” and similar references refer to TransDigm Group Incorporated and its subsidiaries.

Principles of Consolidation

The financial information included herein is unaudited; however, the information reflects all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the Company’s condensed consolidated financial statements for the interim periods presented. These financial statements and notes should be read in conjunction with the financial statements and related notes for the fiscal year ended September 30, 2025 included in TD Group’s Annual Report on Form 10-K filed on November 12, 2025. As disclosed therein, the Company’s annual consolidated financial statements were prepared in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”). The September 30, 2025 condensed consolidated balance sheet was derived from TD Group’s audited financial statements. The results of operations for the thirteen week period ended December 27, 2025 are not necessarily indicative of the results to be expected for the full year.

Reclassifications

Certain reclassifications have been made to the prior year amounts to conform to the current year presentation, none of which are material.

New Accounting Pronouncements Adopted

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” ASU 2023-07 expands disclosures about a public business entity's reportable segments and provides for more detailed information about a reportable segment's expenses. Additionally, ASU 2023-07 requires all segment profit or loss and assets disclosures to be provided on an annual and interim basis. This standard is effective for annual periods beginning after December 15, 2023 (fiscal 2025) and interim periods within fiscal years beginning one year later (fiscal 2026). The Company adopted this standard in the fourth quarter of fiscal 2025. Refer to Note 12, “Segments,” for further information.

Recent Accounting Pronouncements Issued

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires a public business entity to disclose specific categories in its annual effective tax rate reconciliation and disaggregated information about significant reconciling items by jurisdiction and by nature. The ASU also requires entities to disclose their income tax payments (net of refunds) to international, federal, and state and local jurisdictions. The standard makes several other changes to income tax disclosure requirements. This standard is effective for annual periods beginning after December 15, 2024 (fiscal 2026), and requires prospective application with the option to apply it retrospectively. The Company will adopt this standard in the fourth quarter of fiscal 2026 and expects to apply it prospectively. This standard will expand our annual income tax disclosures, but will not impact our consolidated balance sheets, results of operations or cash flows.

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. The standard requires, among other items, additional disaggregated disclosures in the notes to financial statements for certain categories of expenses that are included on the face of the statement of income. The standard is effective for fiscal years beginning after December 15, 2026 (fiscal 2028), and for interim periods within fiscal years beginning after December 15, 2027 (fiscal 2029), on a retrospective or prospective basis, with early adoption permitted. The Company is currently evaluating this standard to determine its impact on our disclosures.

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2. ACQUISITIONS

Subsequent Events – Jet Parts Engineering and Victor Sierra Aviation Holdings – On January 13, 2026, the Company entered into a definitive agreement to acquire all the outstanding stock of Jet Parts Engineering (“JPE”) and Victor Sierra Aviation Holdings (“VSA”), portfolio companies of Vance Street Capital, for approximately $2.2 billion in cash. The acquisition is expected to be financed using existing cash on hand and additional debt capacity available.

JPE, headquartered in Seattle, Washington, is a leading independent designer and manufacturer of aerospace aftermarket solutions, primarily proprietary original equipment manufacturer (“OEM”) alternative parts and repairs. JPE serves commercial, regional and cargo airline customers, as well as maintenance, repair and overhaul providers. JPE’s products are highly engineered, proprietary parts manufacturer approval (“PMA”) components with a strong presence across major commercial aerospace platforms. Nearly all of JPE’s revenue is derived from the commercial aftermarket. In addition to its engineering headquarters in Seattle, Washington, JPE has engineering and component repair locations in Texas, New York, Florida, Alabama and the United Kingdom.

VSA is a leading designer, manufacturer, and distributor of proprietary PMA and other aftermarket parts serving the commercial aerospace end market – primarily the general aviation and business aviation sectors. VSA is a leading collection of brands including McFarlane Aviation, Tempest Aero Group, and Aviation Products Systems. VSA offers a complete line of highly engineered PMA, custom design and OEM products, as well as service and repair stations. Nearly all of VSA’s revenue is derived from the commercial aftermarket. VSA primarily operates out of three facilities: Baldwin City, Kansas; Burlington, North Carolina; and Granite City, Illinois. Additional satellite facilities are in Illinois, Texas, Kentucky and Washington to provide support and strategic proximity to customers.

The acquisition of JPE and VSA is subject to regulatory approvals in the United States and customary closing conditions.

Subsequent Events – Stellant Systems, Inc. – On December 30, 2025, the Company entered into a definitive agreement to acquire all the outstanding stock of Stellant Systems, Inc. (“Stellant”), a portfolio company of Arlington Capital Partners, for approximately $960 million in cash. The acquisition is expected to be financed using existing cash on hand and additional debt capacity available.

Stellant, headquartered in Torrance, California, is a leading global designer and manufacturer of high-power electronic components and subsystems serving the aerospace and defense end market. Stellant’s products are highly engineered, proprietary components with substantial aftermarket content and a strong presence across major aerospace and defense platforms, adding new products and services to TransDigm's portfolio.

The acquisition of Stellant is subject to regulatory approvals in the United States and customary closing conditions.

Simmonds Precision Products, Inc. – On October 6, 2025, the Company completed the acquisition of all the outstanding stock of the Simmonds Precision Products, Inc. Business (“Simmonds”) of Goodrich Corporation from RTX Corporation for approximately $757 million in cash. The acquisition was financed through existing cash on hand. Simmonds, headquartered in Vergennes, Vermont, is a leading global designer and manufacturer of fuel & proximity sensing and structural health monitoring solutions for the aerospace and defense end markets. Simmonds' products are highly engineered, proprietary components with significant aftermarket content and a strong presence across major aerospace and defense platforms. The operating results of Simmonds are included within TransDigm's Power & Control segment.

Based on the fair value of the assets acquired and liabilities assumed, all of the $391 million of goodwill and $329 million of other intangible assets recognized for the acquisition as of December 27, 2025 is expected to be deductible for tax purposes over 15 years. As of December 27, 2025, the measurement period (not to exceed one year) is open; therefore, the assets acquired and liabilities assumed are subject to adjustment until the end of the measurement period.

Servotronics, Inc. – On June 2, 2025, the Company launched a tender offer to acquire all the issued and outstanding stock of Servotronics, Inc. (“Servotronics”), at a price of $47.00 per share in cash. On July 1, 2025, the tender offer expired, resulting in all issued and outstanding stock of Servotronics being canceled and Servotronics becoming a wholly owned subsidiary of the Company. The total purchase price was approximately $133 million in cash, which was financed through existing cash on hand. Servotronics, headquartered in Elma, New York, is a leading global designer and manufacturer of servo controls and other advanced technology components for aerospace and defense applications. Its products are highly engineered, proprietary components with significant aftermarket content and a strong presence across major aerospace and defense platforms. The operating results of Servotronics are included within TransDigm's Power & Control segment.

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Based on the fair value of the assets acquired and liabilities assumed, $75 million of goodwill and $46 million of other intangible assets was recognized for the acquisition as of December 27, 2025, none of which is expected to be deductible for tax purposes. As of December 27, 2025, the measurement period (not to exceed one year) is open; therefore, the assets acquired and liabilities assumed are subject to adjustment until the end of the measurement period.

Other Acquisitions – For the thirteen week period ended December 27, 2025, the Company completed several acquisitions consisting of substantially all of the assets and technical data rights of certain product lines or all the outstanding stock of certain businesses (collectively, referred to herein as the “Other Acquisitions”), each meeting the definition of a business, for a total aggregate purchase price of $151 million in cash. Each of the acquisitions was financed through existing cash on hand. These acquisitions represent bolt-ons to existing TransDigm operating units. The Company expects that all of the $58 million of goodwill and $50 million of other intangible assets recognized as of December 27, 2025 for the acquisitions will be deductible for tax purposes over 15 years. As of December 27, 2025, the measurement period (not to exceed one year) is open for certain Other Acquisitions; therefore, the assets acquired and liabilities assumed are subject to adjustment until the end of the respective measurement period.

For the fiscal year ended September 30, 2025, the Company completed a number of Other Acquisitions, each meeting the definition of a business, for a total aggregate purchase price of $284 million in cash. Each of the acquisitions was financed through existing cash on hand. These acquisitions represent bolt-ons to existing TransDigm operating units. The Company expects that all of the approximately $126 million of goodwill and $90 million of other intangible assets recognized for the acquisitions will be deductible for tax purposes over 15 years.

* * * * *

Pro forma net sales and results of operations for the acquisitions, had they occurred at the beginning of the thirteen week periods ended December 27, 2025 or December 28, 2024 are not material.

The acquisitions completed by the Company strengthen and expand the Company’s position to design, produce and supply highly engineered proprietary aerospace components in niche markets with significant aftermarket content and provide opportunities to create value through the application of our three core value-driven operating strategy (obtaining profitable new business, continually improving our cost structure, and providing highly engineered value-added products to customers). The purchase prices paid reflect the current EBITDA As Defined and cash flows, as well as the future EBITDA As Defined and cash flows expected to be generated by the businesses, which are driven in most cases by the recurring aftermarket consumption over the life of a particular aircraft, estimated to be approximately 25 to 30 years.

3. REVENUE RECOGNITION

TransDigm's sales are concentrated in the aerospace and defense industry. The Company’s customers include: distributors of aerospace components, commercial airlines, large commercial transport and regional and business aircraft OEMs, various armed forces of the United States (“U.S.”) and friendly foreign governments, defense OEMs, system suppliers, and various other industrial customers.

The Company recognizes revenue from contracts with customers using the five step model prescribed in ASC 606. A substantial portion of the Company's revenue is recorded at a point in time basis. Revenue is recognized from the sale of products or services when obligations under the terms of the contract are satisfied and control of promised goods or services has transferred to the customer. Control is transferred when the customer has the ability to direct the use of and obtain benefits from the goods or services. Revenue is measured at the amount of consideration the Company expects to be paid in exchange for goods or services.

In a limited number of contracts, control transfers to the customer over time, primarily in contracts where the customer is required to pay for the cost of both the finished and unfinished goods at the time of cancellation plus a reasonable profit relative to the work performed for products that were customized for the customer. Therefore, we recognize revenue over time for those agreements that have a right to margin and where the products being produced have no alternative use.

Based on our production cycle, it is generally expected that goods related to the revenue will be shipped and billed within twelve months. For revenue recognized over time, we estimate the amount of revenue attributable to a contract earned at a given point during the production cycle based on certain costs, such as materials and labor incurred to date, plus the expected profit, which is a cost-to-cost input method.

We consider the contractual consideration payable by the customer and assess variable consideration that may affect the total transaction price. Variable consideration is included in the estimated transaction price when there is a basis to reasonably estimate the amount, including whether the estimate should be constrained in order to avoid a significant reversal of revenue in a future period. These estimates are based on historical experience, anticipated performance under the terms of the contract and our best judgment at the time.

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When contracts are modified to account for changes in contract specifications and requirements, the Company considers whether the modification either creates new or changes the existing enforceable rights and obligations. Contract modifications that are for goods or services that are not distinct from the existing contract, due to the significant integration with the original good or service provided, are accounted for as if they were part of that existing contract. The effect of a contract modification to an existing contract on the transaction price and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue on a cumulative catch-up basis. When the modifications include additional performance obligations that are distinct and at relative stand-alone selling price, they are accounted for as a new contract and performance obligation, which are recognized prospectively.

The Company’s payment terms vary by the type and location of the customer and the products or services offered. The Company does not offer any payment terms that would meet the requirements for consideration as a significant financing component.

Shipping and handling fees and costs incurred in connection with products sold are recorded in cost of sales in the consolidated statements of income, and are not considered a performance obligation to our customers.

The Company pays sales commissions that relate to contracts for products or services that are satisfied at a point in time or over a period of one year or less and are expensed as incurred. These costs are reported as a component of selling and administrative expenses in the condensed consolidated statements of income.

We have elected to adopt the practical expedient to not disclose the aggregate amount of transaction price allocated to performance obligations that are unsatisfied as of the end of the reporting period for performance obligations that are part of a contract with an original expected duration of one year or less.

Contract Assets and Liabilities – Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing or reimbursable costs related to a specific contract. Contract liabilities (Deferred revenue) relate to payments received in advance of the satisfaction of performance under the contract. We receive payments from customers based on the terms established in our contracts. The following table summarizes our contract assets and liabilities balances (in millions):


	December 27, 2025		September 30, 2025
Contract assets, current (1)	$	306	$	280
Contract assets, non-current (2)	104		94
Total contract assets	410		374
Contract liabilities, current (3)	164		143
Contract liabilities, non-current (4)	7		7
Total contract liabilities	171		150
Net contract assets	$	239	$	224

(1)Included in prepaid expenses and other on the condensed consolidated balance sheets.

(2)Included in other non-current assets on the condensed consolidated balance sheets.

(3)Included in accrued and other current liabilities on the condensed consolidated balance sheets.

(4)Included in other non-current liabilities on the condensed consolidated balance sheets.

For the thirteen week period ended December 27, 2025, the revenue recognized that was included in the contract liability balance at the beginning of the fiscal year was approximately $37 million.

Refer to Note 12, “Segments,” for disclosures related to the disaggregation of revenue.

Allowance for Credit Losses – The Company's allowance for credit losses is the allowance for uncollectible accounts. The allowance for uncollectible accounts reduces the trade accounts receivable balance to the estimated net realizable value equal to the amount that is expected to be collected. As of December 27, 2025 and September 30, 2025, the allowance for uncollectible accounts was $29 million and $25 million, respectively.

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4. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share (in millions, except per share data) using the two-class method:


	Thirteen Week Periods Ended
		December 27, 2025		December 28, 2024
Numerator for earnings per share:
Net income		$	445	$	493
Less: Net income attributable to noncontrolling interests		—		—
Net income attributable to TD Group		445		493
Less: Dividends paid on participating securities		(59)		(49)

Net income applicable to TD Group common stockholders—basic and diluted		$	386	$	444
Denominator for basic and diluted earnings per share under the two-class method:
Weighted-average common shares outstanding		56.4		56.2
Vested options deemed participating securities		1.8		2.1
Total shares for basic and diluted earnings per share		58.2		58.3


Earnings per share—basic and diluted (1)		$	6.62	$	7.62

(1)Figures in the table may not recalculate exactly due to rounding. Earnings per share is calculated using unrounded numbers.

5. STOCK REPURCHASE PROGRAM

On January 27, 2022, the Board of Directors of the Company (the “Board”) authorized a new stock repurchase program permitting repurchases of our outstanding shares not to exceed $2.2 billion in the aggregate (referred to herein as the “existing stock repurchase program”), subject to any restrictions specified in the Second Amended and Restated Credit Agreement dated as of June 4, 2014 (the “Credit Agreement”) and indentures governing the existing Subordinated and Secured Notes, replacing the $650 million stock repurchase program. In November 2025, the Board authorized an additional $5.0 billion in share repurchases of common stock permissible under the Company’s existing stock repurchase program. There is no expiration date for the existing stock repurchase program.

For the thirteen week period ended December 27, 2025, the Company repurchased 85,212 shares of common stock at an average price of $1,249.73 per share for a total amount of $106 million. The repurchased shares of common stock are classified as treasury stock in the statement of changes in stockholders' deficit. As of December 27, 2025, $5,681 million remains available for repurchase under the existing stock repurchase program.

6. INVENTORIES

Inventories are stated at the lower of cost or net realizable value. Cost of inventories is generally determined by the average cost and the first–in, first–out (“FIFO”) methods and includes material, labor and overhead related to the manufacturing process.

Inventories consist of the following (in millions):


	December 27, 2025		September 30, 2025
Raw materials and purchased component parts	$	1,458	$	1,295
Work-in-progress	643		543
Finished goods	272		257
Inventories—Net	$	2,373	$	2,095

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7. GOODWILL AND INTANGIBLE ASSETS

The following is a summary of changes in the carrying value of goodwill by segment from September 30, 2025 through December 27, 2025 (in millions):


	Power & Control		Airframe		Non-aviation		Total
Balance at September 30, 2025	$	5,273	$	5,260	$	79	$	10,612
Goodwill acquired during the period	410		39		—		449


Currency translation adjustments and other	4		10		—		14
Balance at December 27, 2025	$	5,687	$	5,309	$	79	$	11,075

Other intangible assets–net in the condensed consolidated balance sheets consist of the following (in millions):


	December 27, 2025						September 30, 2025
	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Trademarks and trade names	$	1,214	$	—	$	1,214	$	1,162	$	—	$	1,162
Technology	2,788		1,171		1,617		2,647		1,137		1,510
Order backlog	68		36		32		59		28		31
Customer relationships	1,155		240		915		971		225		746
Other	12		7		5		12		7		5
Total	$	5,237	$	1,454	$	3,783	$	4,851	$	1,397	$	3,454

The estimated fair value of the net identifiable tangible and intangible assets acquired is based on the acquisition method of accounting. The fair value of the net identifiable tangible and intangible assets acquired will be finalized within the measurement period (not to exceed one year). Intangible assets acquired during the thirteen week period ended December 27, 2025 are summarized in the table below (in millions):


	Gross Amount		Amortization Period
Intangible assets not subject to amortization:
Trademarks and trade names	$	51

Intangible assets subject to amortization:
Technology & Other	138		10 to 20 years
Order backlog	8		1 to 3 years
Customer relationships	182		10 to 20 years
	328

Total	$	379

The Company performs its annual impairment test for goodwill and other intangible assets as of the first day of the fourth fiscal quarter of each year, or more frequently, if events or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We have assessed the changes in events and circumstances through the first quarter of fiscal 2026 and concluded that no triggering events occurred that required an interim test.

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8. DEBT

The Company’s debt consists of the following (in millions):


	December 27, 2025
	Gross Amount		Debt Issuance Costs		Original Issue Discount		Net Amount
Short-term borrowings—trade receivable securitization facility	$	725	$	(1)	$	—	$	724
Term loans	$	11,124	$	(42)	$	(33)	$	11,049

6.750% secured notes due 2028 (“2028 Secured Notes”)	2,100		(10)		(5)		2,085
4.625% senior subordinated notes due 2029 (“4.625% 2029 Notes”)	1,200		(4)		—		1,196
6.375% secured notes due 2029 (“2029 Secured Notes”)	2,750		(16)		(1)		2,733
4.875% senior subordinated notes due 2029 (“4.875% 2029 Notes”)	750		(3)		—		747
6.875% secured notes due 2030 (“2030 Secured Notes”)	1,450		(10)		—		1,440
7.125% secured notes due 2031 (“2031 Secured Notes”)	1,000		(7)		(6)		987
6.625% secured notes due 2032 (“2032 Secured Notes”)	2,200		(16)		—		2,184
6.000% secured notes due 2033 (“2033 Secured Notes”)	1,500		(12)		—		1,488
6.375% senior subordinated notes due 2033 (“6.375% 2033 Notes”)	2,650		(13)		(19)		2,618
6.250% secured notes due 2034 (“2034 Secured Notes”)	500		(4)		—		496
6.750% senior subordinated notes due 2034 (“6.750% 2034 Notes”)	2,000		(18)		—		1,982
Government refundable advances	13		—		—		13
Finance lease obligations	304		—		—		304
	29,541		(155)		(64)		29,322
Less: current portion	126		(1)		—		125
Long-term debt	$	29,415	$	(154)	$	(64)	$	29,197

Accrued interest, which is classified as a component of accrued and other current liabilities on the condensed consolidated balance sheets, was $478 million and $208 million as of December 27, 2025 and September 30, 2025, respectively.

9. INCOME TAXES

At the end of each reporting period, TD Group makes an estimate of its annual effective income tax rate. The estimate used in the year-to-date period may change in subsequent periods.

During the thirteen week periods ended December 27, 2025 and December 28, 2024, the effective income tax rate was 22.2% and 20.4%, respectively. The Company’s higher effective income tax rate for the thirteen week period ended December 27, 2025 was primarily due to a less significant benefit associated with share-based payments when compared to the same period in fiscal 2025. The Company’s effective income tax rate for the thirteen week period ended December 27, 2025 was higher than the federal statutory tax rate of 21% primarily due to an increase in the valuation allowance applicable to the Company’s net interest deduction limitation, a higher effective tax rate on non-U.S. earnings, offset by the discrete impact of excess tax benefits associated with share-based payments.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state, local and foreign jurisdictions. The Company is no longer subject to U.S. federal examinations for years before fiscal 2022. The Company is currently under examination for its federal income taxes in Canada for fiscal years 2013 through 2019, in France for fiscal years 2020 through 2022, and in Germany for fiscal years 2017 through 2019. In addition, the Company is subject to state income tax examinations for fiscal years 2015 and later.

Unrecognized tax benefits at December 27, 2025 and September 30, 2025 were not material.

On July 4, 2025, H.R. 1, commonly referred to as the One Big Beautiful Bill Act (the “Act”) was signed into law. It contains a broad range of tax reform provisions affecting businesses. The majority of these provisions will impact us starting in fiscal year 2027. We continue to evaluate the future effects of the Act on our effective tax rate and cash tax position. The impact of the legislation on our operating results for the thirteen week period ended December 27, 2025 was not material.

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10. FAIR VALUE MEASUREMENTS

The following table presents our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The following summarizes the carrying amounts and fair values of financial instruments (in millions):


		December 27, 2025				September 30, 2025
	Level	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Cash and cash equivalents	1	$	2,528	$	2,528	$	2,808	$	2,808
Interest rate swap agreements (1)	2	1		1		3		3

Interest rate collar agreements (1)	2	3		3		4		4

Interest rate swap agreements (2)	2	10		10		5		5

Interest rate collar agreements (2)	2	4		4		3		3
Liabilities:


Foreign currency forward exchange contracts (3)	2	1		1		2		2


Interest rate collar agreements (4)	2	2		2		3		3
Short-term borrowings - trade receivable securitization facility (5)	2	724		724		724		724
Long-term debt, including current portion:
Term loans (5)	2	11,049		11,169		11,048		11,120
2028 Secured Notes (5)	1	2,085		2,139		2,083		2,139
4.625% 2029 Notes (5)	1	1,196		1,190		1,195		1,175
2029 Secured Notes (5)	1	2,733		2,833		2,732		2,812
4.875% 2029 Notes (5)	1	747		747		747		739
2030 Secured Notes (5)	1	1,440		1,513		1,440		1,501
2031 Secured Notes (5)	1	987		1,049		986		1,041
2032 Secured Notes (5)	1	2,184		2,283		2,183		2,263
2033 Secured Notes (5)	1	1,488		1,532		1,488		1,517
6.375% 2033 Notes (5)	1	2,618		2,716		2,616		2,686
2034 Secured Notes (5)	1	496		518		495		514
6.750% 2034 Notes (5)	1	1,982		2,083		1,982		2,068
Government refundable advances	2	13		13		12		12
Finance lease obligations	2	304		304		284		284

(1)Included in prepaid expenses and other on the condensed consolidated balance sheets.

(2)Included in other non-current assets on the condensed consolidated balance sheets.

(3)Included in accrued and other current liabilities on the condensed consolidated balance sheets.

(4)Included in other non-current liabilities on the condensed consolidated balance sheets.

(5)The carrying amount of the debt instrument is presented net of debt issuance costs and original issue discount.

The Company values its financial instruments using an industry standard market approach, in which prices and other relevant information are generated by market transactions involving identical or comparable assets or liabilities. No financial instruments were recognized or disclosed using unobservable inputs (i.e., Level 3).

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The Company’s derivatives consist of interest rate swap and collar agreements and foreign currency exchange contracts. The fair values of the interest rate swap and collar agreements were derived by taking the net present value of the expected cash flows using observable market inputs (Level 2) such as SOFR rate curves, futures, volatilities and basis spreads (when applicable). The fair values of the foreign currency exchange contracts were derived by using Level 2 inputs based on observable spot and forward exchange rates in active markets. There has not been any impact to the fair value of derivative liabilities due to the Company's own credit risk. Similarly, there has not been any material impact to the fair value of derivative assets based on the Company's evaluation of counterparties' credit risks.

The estimated fair value of the Company’s term loans was based on information provided by the agent under the Company’s Credit Agreement. The estimated fair values of the Company’s notes were based upon quoted market prices.

The fair value of cash and cash equivalents, trade accounts receivable-net and accounts payable approximated carrying value due to the short-term nature of these instruments at December 27, 2025 and September 30, 2025.

11. DERIVATIVES AND HEDGING ACTIVITIES

The Company is exposed to, among other things, the impact of changes in foreign currency exchange rates and interest rates in the normal course of business. The Company’s risk management program is designed to manage the exposure and volatility arising from these risks, and utilizes derivative financial instruments to offset a portion of these risks. The Company uses derivative financial instruments only to the extent necessary to hedge identified business risks and does not enter into such transactions for trading purposes. The Company generally does not require collateral or other security with counterparties to these financial instruments and is therefore subject to credit risk in the event of nonperformance; however, the Company monitors credit risk and currently does not anticipate nonperformance by other parties. These derivative financial instruments do not subject the Company to undue risk, as gains and losses on these instruments generally offset gains and losses on the underlying assets, liabilities, or anticipated transactions that are being hedged. The Company has agreements with each of its swap, cap and collar counterparties that contain a provision whereby if the Company defaults on the Credit Agreement, the Company could also be declared in default on its swaps, cap and collars resulting in an acceleration of settlement under the swaps, cap and collars.

All derivative financial instruments are recorded at fair value in the condensed consolidated balance sheets. For a derivative that has not been designated as an accounting hedge, the change in the fair value is recognized immediately through earnings. For a derivative that has been designated as an accounting hedge of an existing asset or liability (a fair value hedge), the change in the fair value of both the derivative and underlying asset or liability is recognized immediately through earnings. For a derivative designated as an accounting hedge of an anticipated transaction (a cash flow hedge), the change in the fair value is recorded on the condensed consolidated balance sheets in accumulated other comprehensive loss to the extent the derivative is effective in mitigating the exposure related to the anticipated transaction. The change in the fair value related to the ineffective portion of the hedge, if any, is immediately recognized in earnings. The amount recorded within accumulated other comprehensive loss is reclassified into earnings in the same period during which the underlying hedged transaction affects earnings.

Interest Rate Swap, Cap and Collar Agreements – Interest rate swap, cap and collar agreements are used to manage interest rate risk associated with floating rate borrowings, specifically the term loans, under our Credit Agreement. These agreements involve the receipt of floating rate amounts in exchange for fixed rate interest payments over the term of the agreements without an exchange of the underlying principal amount. The agreements utilized by the Company effectively modify the Company’s exposure to interest rate risk by converting a portion of the Company’s floating rate debt to a fixed rate basis from the effective date through the maturity date of the respective interest rate swap, cap and collar agreements, thereby reducing the impact of interest rate movements on future interest expense.

During the fourth quarter of fiscal 2025, we entered into forward starting interest rate collar agreements and interest rate swap agreements. The interest rate collar agreements, aggregating to a notional amount of $2,750 million, establish a range where we will pay the counterparties if the three-month Term SOFR rate falls below the established floor rate, and the counterparties will pay us if the three-month Term SOFR rate exceeds the ceiling rate as summarized in the table below. The collar will settle quarterly from the effective date through the maturity date. No payments or receipts will be exchanged on the interest rate collar contracts unless interest rates rise above or fall below the contracted ceiling or floor rates. The interest rate swap agreements hedge the variable interest rates on the Company's floating rate debt exposures for a fixed rate based on an aggregate notional amount of $2,750 million. The swap will settle quarterly from the effective date through the maturity date. The Company does not have any interest rate cap agreements as of December 27, 2025.

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The tables below summarize the key terms of the swaps and collars as of December 27, 2025 (aggregated by effective date).

Interest rate swap agreements:

Aggregate Notional Amount (in millions)

Effective Date

Maturity Date

Conversion of Related Variable Rate Debt subject to Term SOFR to Fixed Rate of:

$700

9/30/2025

9/30/2027

3.22% plus applicable margin percentage

$125

9/30/2027

9/30/2029

3.11% plus applicable margin percentage

$1,025

9/30/2027

9/30/2029

3.12% plus applicable margin percentage

$900

9/30/2027

9/30/2029

3.14% plus applicable margin percentage

Interest rate collar agreements:

Aggregate Notional Amount (in millions)

Effective Date

Maturity Date

Offsets Variable Rate Debt Attributable to Fluctuations Below and Above:

$1,100

3/31/2025

9/30/2026

Three-month Term SOFR rate of 2.00% (floor) and 3.50% (cap)

$500

9/30/2025

9/30/2026

Three-month Term SOFR rate of 2.00% (floor) and 3.50% (cap)

$1,338

9/30/2025

9/30/2027

Three-month Term SOFR rate of 2.50% (floor) and 4.50% (cap)

$700

9/30/2025

9/30/2027

Three-month Term SOFR rate of 2.00% (floor) and 3.91% (cap)

$1,550

9/30/2026

9/30/2027

Three-month Term SOFR rate of 2.50% (floor) and 4.50% (cap)

$2,050

9/30/2027

9/30/2029

Three-month Term SOFR rate of 2.21% (floor) and 4.25% (cap)

These derivative instruments qualify as effective cash flow hedges under U.S. GAAP. For our cash flow hedges, the effective portion of the gain or loss from the financial instruments is initially reported as a component of accumulated other comprehensive loss in stockholders’ deficit and subsequently reclassified into earnings in the same line as the hedged item in the same period or periods during which the hedged item affects earnings. As the interest rate swap, cap and collar agreements are used to manage interest rate risk, any gains or losses from the derivative instruments that are reclassified into earnings are recognized in interest expense-net in the condensed consolidated statements of income. Cash flows related to the derivative contracts are included in cash flows from operating activities on the condensed consolidated statements of cash flows.

Certain derivative asset and liability balances are offset where master netting agreements provide for the legal right of setoff. For classification purposes, we record the net fair value of each type of derivative position that is expected to settle in less than one year with each counterparty as a net current asset or liability and each type of long-term position as a net non-current asset or liability. The amounts shown in the table below represent the gross amounts of recognized assets and liabilities, the amounts offset in the condensed consolidated balance sheets and the net amounts of assets and liabilities presented therein (in millions):


	December 27, 2025				September 30, 2025
	Asset		Liability		Asset		Liability

Interest rate collar agreements	$	7	$	2	$	7	$	3
Interest rate swap agreements	11		—		8		—
Net derivatives as classified in the condensed consolidated balance sheets (1)	$	18	$	2	$	15	$	3

(1)Refer to Note 10, “Fair Value Measurements,” for the condensed consolidated balance sheets classification of the Company's interest rate swap and collar agreements.

Based on the fair value amounts determined as of December 27, 2025, the estimated net amount of existing losses (gains) and caplet amortization expected to be reclassified into interest expense-net within the next twelve months is approximately $7 million.

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Foreign Currency Forward Exchange Contracts – The Company transacts business in various foreign currencies, which subjects the Company’s cash flows and earnings to exposure related to changes in foreign currency exchange rates. These exposures arise primarily from purchases or sales of products and services from third parties. Foreign currency forward exchange contracts provide for the purchase or sale of foreign currencies at specified future dates at specified exchange rates, and are used to offset changes in the fair value of certain assets or liabilities or forecasted cash flows resulting from transactions denominated in foreign currencies. At December 27, 2025, the Company has outstanding foreign currency forward exchange contracts to sell U.S. dollars with notional amounts of $89 million. The maximum duration of the Company’s foreign currency cash flow hedge contracts at December 27, 2025 is nine months. These notional values consist of contracts for the Canadian dollar and the euro and are stated in U.S. dollar equivalents at spot exchange rates at the respective trade dates. Amounts related to foreign currency forward exchange contracts included in accumulated other comprehensive loss in stockholders' deficit are reclassified into net sales when the hedged transaction settles. As of December 27, 2025, the Company expects to record a net loss of approximately $1 million on foreign currency forward exchange contracts designated as cash flow hedges to net sales over the next twelve months.

12. SEGMENTS

The Company’s businesses are organized and managed in three reporting segments: Power & Control, Airframe and Non-aviation. Refer to Note 15, “Segments,” in Part IV, Item 15. Exhibits and Financial Statement Schedules, of our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, filed on November 12, 2025, for further information on the composition of the Company's segments.

The Company’s segments are reported on the same basis used internally by our Chief Operating Decision Maker (“CODM”) for evaluating performance and for allocating resources. The Company’s CODM is collectively the President and Chief Executive Officer and Co-Chief Operating Officers. The primary measurement used internally by our CODM and management to review and assess the operating performance of each segment is EBITDA As Defined. Actual results are compared to plan, forecast and prior year on a monthly basis. The Company defines EBITDA As Defined as earnings before interest, taxes, depreciation and amortization plus certain non-operating items recorded as corporate expenses including non-cash compensation charges incurred in connection with the Company’s stock incentive or deferred compensation plans, foreign currency gains and losses, acquisition-integration costs, acquisition transaction-related expenses, and refinancing costs. Acquisition transaction and integration-related expenses represent costs incurred to integrate acquired businesses into TD Group’s operations; facility relocation costs and other acquisition-related costs; transaction and valuation-related costs for acquisitions comprising deal fees, legal, financial and tax due diligence expenses; amortization expense of inventory step-up recorded in connection with the purchase accounting of acquired businesses.

EBITDA As Defined is not a measurement of financial performance under U.S. GAAP. Although the Company uses EBITDA As Defined to assess the performance of its business and for various other purposes, the use of this non-GAAP financial measure as an analytical tool has limitations, and it should not be considered in isolation or as a substitute for analysis of the Company’s results of operations as reported in accordance with U.S. GAAP.

The accounting policies for each segment are the same as those described in Note 1, “Summary of Significant Accounting Policies,” in Part IV, Item 15. Exhibits and Financial Statement Schedules, of our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, filed on November 12, 2025. Intersegment sales and transfers are recorded at values based on market prices, which creates intercompany profit on intersegment sales or transfers that is eliminated in consolidation. Intersegment sales were immaterial for the periods presented below. Corporate consists of our corporate offices. Corporate expenses consist primarily of compensation, benefits, professional services and other administrative costs incurred by the corporate offices. Corporate assets consist primarily of cash and cash equivalents. Corporate expenses and assets reconcile reportable segment data to the consolidated totals. An immaterial amount of corporate expenses is allocated to the operating segments.

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The following table sets forth, for the periods indicated, certain financial information by reportable segment, which includes a reconciliation of EBITDA As Defined to consolidated income from continuing operations before income taxes (in millions):


	Thirteen Week Period Ended December 27, 2025
	Power & Control		Airframe		Non-aviation	Total
Net sales to external customers
Commercial and non-aerospace OEM	$	253	$	294		$	547
Commercial and non-aerospace aftermarket	368		360			728
Defense	603		367			970
Non-aviation	—		—		40	40
Net Sales	1,224		1,021		40	2,285
Less:
Other segment expenses (1)	569		471		24
Total segment EBITDA As Defined	655		550		16	1,221
Less: Unallocated corporate EBITDA As Defined						24
Depreciation and amortization expense						100
Interest expense-net						475
Acquisition transaction and integration-related expenses						12
Non-cash stock and deferred compensation expense						27

Other, net						11
Income from continuing operations before income taxes						$	572

(1)Primarily represents cost of sales, selling expenses, general and administrative expenses, research and development, and miscellaneous income or expense. Excludes depreciation and amortization; non-cash stock and deferred compensation expense; foreign currency transaction losses; acquisition transaction and integration-related expenses and payroll withholding taxes related to dividend equivalent payments.

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	Thirteen Week Period Ended December 28, 2024
	Power & Control		Airframe		Non-aviation	Total
Net sales to external customers
Commercial and non-aerospace OEM	$	194	$	278		$	472
Commercial and non-aerospace aftermarket	338		333			671
Defense	495		335			830
Non-aviation	—		—		33	33
Net Sales	1,027		946		33	$	2,006
Less:
Other segment expenses (1)	442		430		21
Total segment EBITDA As Defined	585		516		12	1,113
Less: Unallocated corporate EBITDA As Defined						52
Depreciation and amortization expense						90
Interest expense-net						378
Acquisition transaction and integration-related expenses						13
Non-cash stock and deferred compensation expense						25

Other, net						(64)
Income from continuing operations before income taxes						$	619

(1)Primarily represents cost of sales, selling expenses, general and administrative expenses, research and development, and miscellaneous income or expense. Excludes depreciation and amortization; non-cash stock and deferred compensation expense; foreign currency transaction gains; acquisition transaction and integration-related expenses and payroll withholding taxes related to dividend equivalent payments.

The following table presents capital expenditures and depreciation and amortization by segment (in millions):


	Thirteen Week Periods Ended
	December 27, 2025		December 28, 2024
Capital expenditures
Power & Control	$	30	$	20
Airframe	24		21
Non-aviation	6		1

	$	60	$	42
Depreciation and amortization
Power & Control	53		43
Airframe	46		46
Non-aviation	1		1

	$	100	$	90

The following table presents total assets by segment (in millions):


	December 27, 2025		September 30, 2025
Total assets
Power & Control	$	10,916	$	9,859
Airframe	10,346		10,267
Non-aviation	199		202
Corporate (1)	2,296		2,581
	$	23,757	$	22,909

(1)Corporate consists of our corporate offices and does not constitute an operating segment. These amounts are included to reconcile to total consolidated assets.

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13. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents the total changes by component in accumulated other comprehensive income (loss), net of taxes, for the thirteen week periods ended December 27, 2025 and December 28, 2024 (in millions):


	Unrealized losses on derivatives (1)		Pension and post-retirement benefit plans adjustment (2)		Foreign currency translation adjustment (3)		Total
Balance at September 30, 2025	$	(4)	$	(2)	$	(4)	$	(10)


Net current-period other comprehensive income (4)	6		—		26		32
Balance at December 27, 2025	$	2	$	(2)	$	22	$	22

Balance at September 30, 2024	$	19	$	1	$	(62)	$	(42)


Net current-period other comprehensive income (loss) (4)	22		—		(227)		(205)
Balance at December 28, 2024	$	41	$	1	$	(289)	$	(247)

(1)Represents unrealized gains (losses) on derivatives designated and qualifying as cash flow hedges, net of tax (expense) benefit, of $2 million and $7 million for the thirteen week periods ended December 27, 2025 and December 28, 2024, respectively.

(2)There were no material pension liability adjustments, net of taxes, related to activity for the defined pension plans and postretirement benefit plans for the thirteen week periods ended December 27, 2025 and December 28, 2024.

(3)Represents gains (losses) resulting from foreign currency translation of financial statements, including gains (losses) from certain intercompany transactions, into U.S. dollars at the rates of exchange in effect at the balance sheet dates.

(4)Presented net of reclassifications out of accumulated other comprehensive income (loss) into earnings, specifically net sales and interest expense-net, for realized (losses) gains on derivatives designated and qualifying as cash flow hedges of $(1) million (net of taxes of less than $(1) million) and $1 million (net of taxes of $1 million), respectively, for the thirteen week period ended December 27, 2025 and less than $(1) million (net of taxes of less than $(1) million) and $1 million (net of taxes of less than $1 million), respectively, for the thirteen week period ended December 28, 2024.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-looking Statements

The following discussion of the Company’s financial condition and results of operations should be read together with TD Group’s condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q. References in this section to “TransDigm,” “the Company,” “we,” “us,” “our,” and similar references refer to TD Group, TransDigm Inc. and TransDigm Inc.’s subsidiaries, unless the context otherwise indicates.

This Quarterly Report on Form 10-Q contains both historical and “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and 27A of the Securities Act of 1933, as amended. All statements other than statements of historical fact included that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements, including, in particular, the statements about our plans, objectives, strategies and prospects regarding, among other things, our financial condition, results of operations and business. We have identified some of these forward-looking statements with words like “believe,” “may,” “will,” “should,” “expect,” “intend,” “plan,” “predict,” “anticipate,” “estimate” or “continue” and other words and terms of similar meaning. These forward-looking statements may be contained throughout this Quarterly Report on Form 10-Q. These forward-looking statements are based on current expectations about future events affecting us and are subject to uncertainties and factors relating to, among other things, our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we do not know whether our expectations will prove correct. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties, including the risks described in Item 1A, “Risk Factors,” of the Annual Report on Form 10-K. Since our actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements, we cannot give any assurance that any of the events anticipated by these forward-looking statements will occur or, if any of them does occur, what impact they will have on our business, results of operations and financial condition. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. We do not undertake any obligation to update these forward-looking statements or the risk factors contained in this Quarterly Report on Form 10-Q to reflect new information, future events or otherwise, except as may be required under federal securities laws.

Important factors that could cause actual results to differ materially from the forward-looking statements made in this Quarterly Report on Form 10-Q include but are not limited to: the sensitivity of our business to the number of flight hours that our customers’ planes spend aloft and our customers’ profitability, both of which are affected by general economic conditions; supply chain constraints; increases in raw material costs, taxes and labor costs that cannot be recovered in product pricing; failure to complete or successfully integrate acquisitions; our indebtedness; current and future geopolitical or other worldwide events, including, without limitation, wars or conflicts and public health crises; cybersecurity threats; risks related to the transition or physical impacts of climate change and other natural disasters or meeting regulatory requirements; our reliance on certain customers; the United States (“U.S.”) defense budget and risks associated with being a government supplier including government audits and investigations; failure to maintain government or industry approvals; risks related to changes in laws and regulations, including increases in compliance costs and potential changes in trade policies and tariffs; potential environmental liabilities; liabilities arising in connection with litigation; risks and costs associated with our international sales and operations; and other factors. Refer to Part II, Item 1A included in this Quarterly Report on Form 10-Q and to Part I, Item 1A of the Annual Report on Form 10-K for additional information regarding the foregoing factors that may affect our business.

Overview

We believe we are a leading global designer, producer and supplier of highly engineered proprietary aerospace components with significant aftermarket content. We seek to develop highly customized products to solve specific needs for aircraft operators and manufacturers. We attempt to differentiate ourselves based on engineering, service and manufacturing capabilities. We believe that our products have strong brand names within the industry and that we have a reputation for high quality, reliability and strong customer support. We believe we have achieved steady, long-term growth in sales and improvements in operating performance due to our competitive strengths and through execution of our value-driven operating strategy. More specifically, focusing our businesses on our value-driven operating strategy of obtaining profitable new business, carefully controlling the cost structure via productivity and cost improvements and pricing our highly engineered value-added products to fairly reflect the value we provide and the resources required to do so has historically resulted in improvements in gross profit and income from operations over the long-term.

Our selective acquisition strategy has also been an important contribution to the growth of our business. We maintain a selective acquisition strategy, concentrating on proprietary commercial aerospace component businesses with significant aftermarket content where we see a clear path to value creation through the application of our three core value drivers. The integration of acquisitions into our existing businesses combined with implementing our proven operating strategy has historically resulted in improvements in the financial performance of the acquired businesses.

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For the first quarter of fiscal 2026, we generated net sales of $2,285 million and net income attributable to TD Group of $445 million. EBITDA As Defined was $1,197 million, or 52.4% of net sales. Refer to the “Non-GAAP Financial Measures” section for certain information regarding EBITDA and EBITDA As Defined, including reconciliations of EBITDA and EBITDA As Defined to net income and net cash provided by operating activities.

For the thirteen week period ended December 27, 2025, demand for air travel remained strong both domestically and internationally. Commercial aftermarket sales increased in the first quarter of fiscal 2026 compared to fiscal 2025 primarily due to the overall demand for air travel, particularly international air traffic growth, which has outpaced domestic growth. Passenger load factors remain strong and have reached record levels in recent months in certain markets.

Our commercial transport original equipment manufacturer (“OEM”) shipments and revenues generally run ahead of aircraft delivery schedules. Consistent with prior years, our first quarter of fiscal 2026 shipments were a function of, among other things, the estimated 2025 and 2026 commercial aircraft production rates for Boeing and Airbus. Airline demand for new aircraft remains high and the OEMs continue to increase aircraft production. Commercial OEM sales increased in the first quarter of fiscal 2026 compared to fiscal 2025 partially due to the prior year Boeing union strike adversely impacting first quarter fiscal 2025 OEM sales as well as overall increases beginning in the latter half of fiscal 2025 and thus far in fiscal 2026 in aircraft production and deliveries by the OEMs.

Our defense business fluctuates from year-to-year, and is dependent, to a degree, on government budget constraints, the timing of orders, macro and micro dynamics with respect to the U.S. Department of War (“DOW”) procurement policy and the extent of global conflicts. Likewise, delays in government spending outlays and government funding reprioritization can impact demand. For a variety of reasons, the military spending outlook is very uncertain, though recent DOW budgets have trended upwards due to recent geopolitical challenge and conflicts, and current military modernization efforts. Defense sales increased in the first quarter of fiscal 2026 compared to fiscal 2025 primarily due to continued growth in defense spending in both domestic and international markets.

Critical Accounting Policies and Estimates

The preparation and fair presentation of the consolidated unaudited interim financial statements and accompanying notes included in this report are the responsibility of management. The financial statements and footnotes have been prepared in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial statements and contain certain amounts that were based upon management’s best estimates, judgments and assumptions that were believed to be reasonable under the circumstances. On an ongoing basis, we evaluate the accounting policies and estimates used to prepare financial statements. Estimates are based on historical experience, judgments and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates used by management.

A comprehensive discussion of the Company’s critical accounting policies and management estimates and significant accounting policies followed in the preparation of the financial statements is included in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, filed on November 12, 2025. Refer to Note 1, “Basis of Presentation,” in the notes to the condensed consolidated financial statements included herein for further disclosure of accounting standards recently adopted or required to be adopted in the future.

Acquisitions

Recent acquisitions are described in Note 2, “Acquisitions,” in the notes to the condensed consolidated financial statements included herein.

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Results of Operations

The following table sets forth, for the periods indicated, certain operating data of the Company, including presentation of the amounts as a percentage of net sales (amounts in millions, except per share data):


	Thirteen Week Periods Ended
	December 27, 2025			% of Net Sales		December 28, 2024			% of Net Sales
Net sales	$	2,285		100.0	%	$	2,006		100.0	%
Cost of sales	933			40.8	%	771			38.4	%
Selling and administrative expenses	254			11.1	%	211			10.5	%
Amortization of intangible assets	56			2.5	%	50			2.5	%
Income from operations	1,042			45.6	%	974			48.6	%
Interest expense-net	475			20.8	%	378			18.8	%

Other income	(5)			(0.2)	%	(23)			(1.1)	%
Income tax provision	127			5.6	%	126			6.3	%
Income from continuing operations	445			19.5	%	493			24.6	%
Less: Net income attributable to noncontrolling interests	—			—	%	—			—	%


Net income attributable to TD Group	$	445		19.5	%	$	493		24.6	%
Net income applicable to TD Group common stockholders	$	386	(1)	16.9	%	$	444	(1)	22.1	%
Earnings per share attributable to TD Group common stockholders:


Basic and diluted	$	6.62	(2)			$	7.62	(2)

Weighted-average shares outstanding—basic and diluted	58.2					58.3
Other Data:
EBITDA	$	1,147	(3)			$	1,087	(3)
EBITDA As Defined	$	1,197	(3)	52.4	%	$	1,061	(3)	52.9	%

(1)Net income applicable to TD Group common stockholders represents net income attributable to TD Group less special dividends declared or paid on participating securities, including dividend equivalents of $59 million and $49 million for the thirteen week periods ended December 27, 2025 and December 28, 2024, respectively.

(2)Earnings per share is calculated by dividing net income applicable to TD Group common stockholders by the basic and diluted weighted average common shares outstanding. Figures in the table may not recalculate exactly due to rounding. Earnings per share is calculated using unrounded numbers.

(3)Refer to “Non-GAAP Financial Measures” in this discussion and analysis for additional information and limitations regarding these non-GAAP financial measures, including a reconciliation to the comparable U.S. GAAP financial measure.

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Changes in Results of Operations

Thirteen week period ended December 27, 2025 compared with the thirteen week period ended December 28, 2024

Total Company

•Net Sales. Net organic sales and acquisition sales and the related dollar and percentage changes for the thirteen week periods ended December 27, 2025 and December 28, 2024 were as follows (amounts in millions):


	Thirteen Week Periods Ended						% Change Net Sales
	December 27, 2025		December 28, 2024		Change
Organic sales	$	2,155	$	2,006	$	149	7.4	%
Acquisition sales	130		—		130		6.5	%
Net sales	$	2,285	$	2,006	$	279	13.9	%

Organic sales represent net sales from existing businesses owned by the Company, excluding sales from acquisitions. Acquisition sales represent net sales from acquired businesses for the period up to one year from the respective acquisition date. We believe this measure provides investors with a supplemental understanding of underlying sales trends by providing sales growth on a consistent basis. Refer to Note 2, “Acquisitions,” in the notes to the condensed consolidated financial statements included herein for information on the Company's recent acquisitions.

The increase in organic sales of $149 million for the thirteen week period ended December 27, 2025 compared to the thirteen week period ended December 28, 2024 is related to increases in defense, commercial OEM and commercial aftermarket sales.

•Cost of Sales and Gross Profit. Cost of sales increased by $162 million, or 21.0%, to $933 million for the thirteen week period ended December 27, 2025 compared to $771 million for the thirteen week period ended December 28, 2024. Cost of sales and the related percentage of net sales for the thirteen week periods ended December 27, 2025 and December 28, 2024 were as follows (amounts in millions):


	Thirteen Week Periods Ended
	December 27, 2025			December 28, 2024			Change		% Change
Cost of sales - excluding costs below	$	890		$	759		$	131	17.3	%
% of net sales	38.9		%	37.8		%
Depreciation	34			30			4		13.3	%
% of net sales	1.5		%	1.5		%
Foreign currency losses (gains)	6			(20)			26		130.0	%
% of net sales	0.3		%	(1.0)		%
Non-cash stock and deferred compensation expense	3			2			1		50.0	%
% of net sales	0.1		%	0.1		%
Total cost of sales	$	933		$	771		$	162	21.0	%
% of net sales	40.8		%	38.4		%
Gross profit (Net sales less Total cost of sales)	$	1,352		$	1,235		$	117	9.5	%
Gross profit percentage (Gross profit / Net sales)	59.2		%	61.6		%

Cost of sales during the thirteen week period ended December 27, 2025 increased as a percentage of net sales. This was primarily driven by the dilutive impact of the recent acquisitions. Excluding the dilutive impact from these acquisitions, cost of sales as a percentage of net sales decreased due to the application of our three core value-driven operating strategy (obtaining profitable new business, continually improving our cost structure and providing highly engineered value-added products to customers) coupled with fixed overhead costs spread over a higher production volume.

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•Selling and Administrative Expenses. Selling and administrative expenses increased by $43 million to $254 million for the thirteen week period ended December 27, 2025. The related percentage of net sales for the thirteen week periods ended December 27, 2025 and December 28, 2024 were as follows (amounts in millions):


	Thirteen Week Periods Ended
	December 27, 2025			December 28, 2024			Change		% Change
Selling and administrative expenses - excluding costs below	$	225		$	184		$	41	22.3	%
% of net sales	9.8		%	9.2		%
Non-cash stock and deferred compensation expense	24			23			1		4.3	%
% of net sales	1.1		%	1.1		%
Acquisition transaction and integration-related expenses	5			4			1		25.0	%
% of net sales	0.2		%	0.2		%
Total selling and administrative expenses	$	254		$	211		$	43	20.4	%
% of net sales	11.1		%	10.5		%

The increase in selling and administrative expenses, both in total and as a percentage of net sales, compared to fiscal 2025 is primarily attributable to the impact of the recent acquisitions and higher general and administrative expenses.

•Interest Expense-net. Interest expense-net includes interest on borrowings outstanding, amortization of debt issuance costs, original issue discount, revolving credit facility fees, finance leases, interest income and the impact of interest rate swaps and collars designated and qualifying as cash flow hedges. Interest expense-net increased $97 million, or 25.7%, to $475 million for the thirteen week period ended December 27, 2025 from $378 million for the comparable thirteen week period in the prior fiscal year. The increase in interest expense-net was primarily due to an increase in outstanding borrowings and a decrease in interest income. The weighted average interest rate for cash interest payments on total borrowings outstanding was 6.3% and 6.2% for the thirteen week periods ended December 27, 2025 and December 28, 2024, respectively.

•Income Tax Provision. Income tax expense as a percentage of income before income taxes was approximately 22.2% for the thirteen week period ended December 27, 2025 compared to 20.4% for the thirteen week period ended December 28, 2024. Refer to Note 9, “Income Taxes”, in the notes to the condensed consolidated financial statements included herein for additional information.

•Earnings per Share. Basic and diluted earnings per share was $6.62 for the thirteen week period ended December 27, 2025 and $7.62 for the thirteen week period ended December 28, 2024. Net income attributable to TD Group for the thirteen week period ended December 27, 2025 of $445 million was decreased by dividend equivalent payments of $59 million, or $1.02 per share, resulting in net income applicable to TD Group common stockholders of $386 million. Net income attributable to TD Group for the thirteen week period ended December 28, 2024 of $493 million was decreased by dividend equivalent payments of $49 million, or $0.83 per share, resulting in net income applicable to TD Group common stockholders of $444 million.

Business Segments

•Segment Net Sales. Net sales by segment for the thirteen week periods ended December 27, 2025 and December 28, 2024 were as follows (amounts in millions):


	Thirteen Week Periods Ended
	December 27, 2025		% of Net Sales		December 28, 2024		% of Net Sales		Change		% Change
Power & Control	$	1,224	53.6	%	$	1,027	51.2	%	$	197	19.2	%
Airframe	1,021		44.7	%	946		47.2	%	75		7.9	%
Non-aviation	40		1.7	%	33		1.6	%	7		21.2	%
Net sales	$	2,285	100.0	%	$	2,006	100.0	%	$	279	13.9	%

Net sales for the Power & Control segment increased $197 million primarily from increases in organic sales in defense, commercial OEM and commercial aftermarket.

Net sales for the Airframe segment increased $75 million primarily from increases in organic sales in commercial OEM, commercial aftermarket and defense.

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•EBITDA As Defined. Refer to “Non-GAAP Financial Measures” in this discussion and analysis for additional information and limitations regarding these non-GAAP financial measures, including a reconciliation to the comparable U.S. GAAP financial measure. EBITDA As Defined by segment for the thirteen week periods ended December 27, 2025 and December 28, 2024 were as follows (amounts in millions):


	Thirteen Week Periods Ended
	December 27, 2025		% of Segment Net Sales			December 28, 2024		% of Segment Net Sales			Change		% Change
Power & Control	$	655	53.5	%		$	585	57.0	%		$	70	12.0	%
Airframe	550		53.9	%		516		54.5	%		34		6.6	%
Non-aviation	16		40.0	%		12		36.4	%		4		33.3	%
Total segment EBITDA As Defined	1,221		53.4	%		1,113		55.5	%		108		9.7	%
Less: Unallocated corporate EBITDA As Defined	24		1.0	%	(1)	52		2.6	%	(1)	(28)		(53.8)	%
Total Company EBITDA As Defined	$	1,197	52.4	%	(1)	$	1,061	52.9	%	(1)	$	136	12.8	%

(1)Calculated as a percentage of consolidated net sales.

EBITDA As Defined for the Power & Control and Airframe segments increased $70 million and $34 million, respectively, due to the increase in net sales described above, along with our application of our three core value-driven operating strategy.

Unallocated corporate EBITDA As Defined consists primarily of corporate expenses which includes compensation, benefits, professional services and other administrative costs incurred by our corporate offices. The decrease from prior year is attributable to the expiration of a deferred compensation program that was not renewed.

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Liquidity and Capital Resources

We historically maintained a capital structure comprising a mix of equity and debt financing. We vary our leverage both to optimize our equity return and to pursue acquisitions. We expect to meet our current debt obligations as they come due through internally generated funds from current levels of operations and/or through refinancing in the debt markets prior to the maturity dates of our debt.

The following tables present selected balance sheet, cash flow and other financial data relevant to the liquidity or capital resources of the Company for the periods specified below (amounts in millions):


	December 27, 2025		September 30, 2025
Selected Balance Sheet Data:
Cash and cash equivalents	$	2,528	$	2,808
Working capital (Total current assets less total current liabilities)	4,436		4,830
Total assets	23,757		22,909
Total debt (1)	30,046		30,015
TD Group stockholders’ deficit	(9,270)		(9,686)

(1)Includes debt issuance costs and original issue discount. Reference Note 8, “Debt,” in the notes to the condensed consolidated financial statements included herein for additional information.


	Thirteen Week Periods Ended
	December 27, 2025		December 28, 2024
Selected Cash Flow and Other Financial Data:
Cash flows provided by (used in):
Operating activities	$	832	$	752
Investing activities	(973)		(24)
Financing activities	(141)		(4,516)
Capital expenditures	60		42
Ratio of earnings to fixed charges (1)	2.2x		2.6x

(1)For purposes of computing the ratio of earnings to fixed charges, earnings consist of income from continuing operations before income taxes plus fixed charges. Fixed charges consist of interest expense, amortization of debt issuance costs and original issue discount and the “interest component” of rental expense.

Significant Transactions of Fiscal 2026

The Company completed the acquisition of all the outstanding stock of Simmonds for approximately $757 million in cash. The acquisition was financed through existing cash on hand.

The Company completed several acquisitions consisting of substantially all of the assets and technical data rights of certain product lines or all the outstanding stock of certain businesses (collectively, referred to herein as the “Other Acquisitions”), each meeting the definition of a business, for a total aggregate purchase price of $151 million in cash. Each of the acquisitions was financed through existing cash on hand.

The Company repurchased 85,212 shares of common stock at an average price of $1,249.73 per share for a total amount of $106 million. The repurchased shares of common stock are classified as treasury stock in the statement of changes in stockholders' deficit. Whether the Company undertakes additional share repurchases or other aforementioned activities will depend on prevailing market conditions, the Company's liquidity requirements, contractual restrictions and other factors.

Subsequent Events

On January 13, 2026, the Company entered into a definitive agreement to acquire all the outstanding stock of Jet Parts Engineering (“JPE”) and Victor Sierra Aviation Holdings (“VSA”), portfolio companies of Vance Street Capital, for approximately $2.2 billion in cash.

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On December 30, 2025, the Company entered into a definitive agreement to acquire all the outstanding stock of Stellant Systems, Inc. (“Stellant”) for approximately $960 million in cash.

These acquisitions are expected to be financed using existing cash on hand and additional debt capacity available. The acquisitions are subject to regulatory approvals in the United States and customary closing conditions.

* * * * *

If the Company has excess cash, it generally prioritizes allocating the excess cash in the following manner: (1) capital spending at existing businesses, (2) acquisitions of businesses, (3) payment of a special dividend and/or repurchases of our common stock and (4) prepayment of indebtedness or repurchase of debt.

The Company’s ability to make scheduled interest payments on, or to refinance, the Company’s indebtedness, or to fund non-acquisition related capital expenditures and research and development efforts, will depend on the Company’s ability to generate cash in the future. This is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond its control.

The Company's objective is to maintain an allocation of at least 75% fixed rate and 25% variable rate debt thereby limiting its exposure to changes in near-term interest rates. Interest rate swaps, caps and collars used to hedge and offset, respectively, the variable interest rates on our term loans are further described in Note 11, “Derivatives and Hedging Activities,” in the notes to the condensed consolidated financial statements included herein. As of December 27, 2025, approximately 75% of our gross debt was fixed rate.

As of December 27, 2025, the Company has significant cash liquidity as illustrated in the table presented below (in millions):


	As of December 27, 2025
Cash and cash equivalents	$	2,528
Availability on revolving credit facility	859
Cash liquidity	$	3,387

We believe our significant cash liquidity will allow us to meet our anticipated funding requirements. We expect to meet our short-term cash liquidity requirements (including interest obligations and capital expenditures) through net cash from operating activities, cash on hand and, if needed, draws on the revolving credit facility. Long-term cash liquidity requirements consist primarily of obligations under our long-term debt agreements. There is no maturity on any tranche of term loans or notes until August 2028 (fiscal 2028).

In connection with the continued application of our three core value-driven operating strategy, we expect our efforts will continue to generate strong margins and provide sufficient cash provided by operating activities to meet our interest obligations and liquidity needs. We believe our cash provided by operating activities and available borrowing capacity will enable us to make strategic business acquisitions, pay dividends to our shareholders and make opportunistic investments in our own stock, subject to any restrictions in our existing Second Amended and Restated Credit Agreement dated as of June 4, 2014 (the “Credit Agreement”) and market conditions.

The Company may issue additional debt if prevailing market conditions are favorable to doing so. In addition, the Company may increase its borrowings in connection with acquisitions, if cash flow from operating activities becomes insufficient to fund current operations or for other short-term cash needs or for common stock repurchases or dividends. Our future leverage will also be impacted by the then current conditions of the credit markets.

Operating Activities. The Company generated $832 million of net cash from operating activities during the thirteen week period ended December 27, 2025 compared to $752 million during the thirteen week period ended December 28, 2024.

The change in accounts receivable during the thirteen week period ended December 27, 2025 was a source of cash of $94 million compared to a source of cash of $80 million during the thirteen week period ended December 28, 2024. The increase is primarily attributable to the timing of cash receipts. The Company actively manages its accounts receivable, the related agings and collection efforts.

The change in inventories during the thirteen week period ended December 27, 2025 was a use of cash of $96 million compared to a use of cash of $72 million during the thirteen week period ended December 28, 2024. The increase is due to an increase in raw materials to support the fiscal 2026 sales demand. The Company manages inventory levels in support of customer needs.

The change in accounts payable during the thirteen week period ended December 27, 2025 was a use of cash of $25 million compared to a use of cash of $3 million during the thirteen week period ended December 28, 2024. The change is due to the timing of payments to suppliers.

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Investing Activities. Net cash used in investing activities was $973 million during the thirteen week period ended December 27, 2025, consisting primarily of the acquisition of Simmonds and other acquisitions of businesses completed during the first quarter of fiscal 2026 aggregating to $907 million, capital expenditures of $60 million and other investing transactions outflows of $6 million.

Net cash used in investing activities was $24 million during the thirteen week period ended December 28, 2024, consisting of capital expenditures of $42 million and other acquisitions of businesses completed during the first quarter of fiscal 2025 aggregating to $29 million; partially offset by by other investing transactions inflows of $47 million.

Financing Activities. Net cash used in financing activities was $141 million during the thirteen week period ended December 27, 2025. The use of cash was primarily attributable to repurchases of common stock of $106 million and dividend equivalent payments of $59 million; primarily offset by proceeds from stock option exercises of $29 million.

Net cash used in financing activities was $4,516 million during the thirteen week period ended December 28, 2024. The use of cash was primarily attributable to dividend and dividend equivalent payments of $4,396 million and repurchases of common stock of $316 million; partially offset by an additional draw from the trade receivable securitization facility, including fees, of $163 million and proceeds from stock option exercises of $35 million.

Description of Senior Secured Term Loans and Indentures

Senior Secured Term Loans Facilities

TransDigm has $11,124 million in fully drawn term loans (the “Term Loans Facility”) as of December 27, 2025 and a $910 million revolving credit facility. The Term Loans Facility consists of four tranches of term loans with maturity dates ranging from March 22, 2030 to August 19, 2032, and requires quarterly aggregate principal payments of $28 million. Due to the timing of the fiscal quarter ended December 27, 2025, no principal payments were made in the first quarter of fiscal 2026.

The revolving commitments consist of two tranches which include up to $139 million of multicurrency revolving commitments. At December 27, 2025, the Company had $51 million in letters of credit outstanding and $859 million in borrowings available under the revolving commitments. Draws on the revolving commitments are subject to an interest rate of 2.25%. The unused portion of the revolving commitments is subject to a fee of 0.50% per annum. The maturity date of the revolving credit facility is February 27, 2029.

The interest rates per annum applicable to the Term Loans Facility under the Credit Agreement are, at TransDigm’s option, equal to either an alternate base rate or an adjusted Term SOFR for one, three or six-month interest periods chosen by TransDigm, in each case plus an applicable margin percentage. The adjusted Term SOFR related to the Term Loans Facility are not subject to a floor. Refer to Note 11, “Derivatives and Hedging Activities,” in the notes to the condensed consolidated financial statements included herein for information about how our interest rate swaps, caps and collar agreements are used to hedge and offset, respectively, the variable interest rate portion of our debt.

Indentures

The following table represents the senior subordinated and secured notes outstanding as of December 27, 2025:

Description

Aggregate Principal

Maturity Date

Interest Rate

2028 Secured Notes (2)

$2,100 million

August 15, 2028

6.750%

4.625% 2029 Notes (1)

$1,200 million

January 15, 2029

4.625%

2029 Secured Notes (2)

$2,750 million

March 1, 2029

6.375%

4.875% 2029 Notes (1)

$750 million

May 1, 2029

4.875%

2030 Secured Notes (2)

$1,450 million

December 15, 2030

6.875%

2031 Secured Notes (2)

$1,000 million

December 1, 2031

7.125%

2032 Secured Notes (2)

$2,200 million

March 1, 2032

6.625%

2033 Secured Notes (2)

$1,500 million

January 15, 2033

6.000%

6.375% 2033 Notes (1)

$2,650 million

May 31, 2033

6.375%

2034 Secured Notes (2)

$500 million

January 31, 2034

6.250%

6.750% 2034 Notes (1)

$2,000 million

January 31, 2034

6.750%

(1)Collectively, referred to as the “Subordinated Notes” herein.

(2)Collectively, referred to as the “Secured Notes” herein.

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The Subordinated Notes and Secured Notes do not require principal payments prior to their maturity. Interest under the Subordinated Notes and Secured Notes is payable semi-annually. The Subordinated Notes represent our unsecured obligations ranking subordinate to our senior debt, as defined in the applicable indentures. The Secured Notes represent our secured obligations ranking equally to all existing and future senior debt, as defined in the applicable indentures. The Subordinated Notes and Secured Notes contain many of the restrictive covenants included in the Credit Agreement. TransDigm is in compliance with all of the covenants contained in the Subordinated Notes and Secured Notes.

Guarantor Information

The Subordinated Notes are subordinated to all of our existing and future senior secured debt, including indebtedness under TransDigm’s existing senior secured credit facilities, rank equally with all of our existing and future senior subordinated debt and rank senior to all of our future debt that is expressly subordinated to the Subordinated Notes. The 4.625% 2029 Notes and the 4.875% 2029 Notes are fully and unconditionally guaranteed on a senior subordinated unsecured basis by TransDigm Group, TransDigm UK and TransDigm Inc.’s Domestic Restricted Subsidiaries (as defined in the applicable indentures). The 6.375% 2033 Notes and the 6.750% 2034 Notes are guaranteed, on a senior subordinated basis, by TransDigm Group and each of TransDigm Inc.’s direct and indirect restricted subsidiaries that is a borrower or guarantor under TransDigm’s senior secured credit facilities or that issues or guarantees any capital markets indebtedness of TransDigm or any of the guarantors in an aggregate principal amount of at least $200 million. The table set forth in Exhibit 22.1 filed with this Form 10-Q details the primary obligors and guarantors. The guarantees of the Subordinated Notes are subordinated to all of the guarantors’ existing and future senior debt, rank equally with all of their existing and future senior subordinated debt and rank senior to all of their future debt that is expressly subordinated to the guarantees of the Subordinated Notes. The Subordinated Notes are structurally subordinated to all of the liabilities of TransDigm Group’s non-guarantor subsidiaries.

The Secured Notes are senior secured debt of TransDigm and rank equally in right of payment with all of TransDigm’s existing and future senior secured debt, including indebtedness under TransDigm’s existing senior secured credit facilities, and are senior in right of payment to all of TransDigm’s existing and future senior subordinated debt, including the Subordinated Notes. The 2028 Secured Notes are guaranteed on a senior secured basis by TransDigm Group, TransDigm UK and TransDigm Inc.’s Domestic Restricted Subsidiaries (as defined in the applicable indentures). The 2029 Secured Notes, 2030 Secured Notes, 2031 Secured Notes, 2032 Secured Notes, 2033 Secured Notes and 2034 Secured Notes are guaranteed on a senior secured basis by TransDigm Group and each of TransDigm Inc.’s direct and indirect Restricted Subsidiaries (as defined in the applicable indenture) that is a borrower or guarantor under TransDigm’s senior secured credit facilities or that issues or guarantees any capital markets indebtedness of TransDigm Inc. or any of the guarantors in an aggregate principal amount of at least $200 million. As of the date of this Form 10-Q, the guarantors of the 2029 Secured Notes, 2030 Secured Notes, 2031 Secured Notes, 2032 Secured Notes, 2033 Secured Notes and 2034 Secured Notes are the same as the guarantors of the 2028 Secured Notes. The table set forth in Exhibit 22.1 filed with this Form 10-Q details the primary obligors and guarantors. The guarantees of the Secured Notes rank equally in right of payment with all of the guarantors’ existing and future senior secured debt and are senior in right of payment to all of their existing and future senior subordinated debt. The Secured Notes are structurally subordinated to all of the liabilities of TransDigm’s non-guarantor subsidiaries.

Separate financial statements of TransDigm Inc. are not presented because the Subordinated Notes and Secured Notes are fully and unconditionally guaranteed on a senior subordinated unsecured basis (if Subordinated Notes) and senior secured basis (if Secured Notes) by TransDigm Group, TransDigm UK and all of TransDigm Inc.'s Domestic Restricted Subsidiaries. TransDigm Group has no significant operations or assets separate from its investment in TransDigm Inc.

The financial information presented is that of TransDigm Group, TransDigm Inc. and the other Guarantors, which includes TransDigm UK, on a combined basis and the financial information of non-issuer and non-guarantor subsidiaries has been excluded. Intercompany balances and transactions between TransDigm Group, TransDigm Inc. and the other Guarantors have been eliminated, and amounts due from, amounts due to, and transactions with non-issuer and non-guarantor subsidiaries have been presented separately.

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(in millions)	As of December 27, 2025
Current assets	$	4,496
Goodwill	8,789
Other non-current assets	4,408
Current liabilities	1,434
Non-current liabilities	30,084
Amounts due (from) to subsidiaries that are non-issuers and non-guarantors-net	(2,328)


	Thirteen Week Period Ended
(in millions)	December 27, 2025
Net sales	$	1,816
Sales to subsidiaries that are non-issuers and non-guarantors	8
Cost of sales	736
Expense from subsidiaries that are non-issuers and non-guarantors-net	13
Income from operations	283
Net income attributable to TD Group	283

Certain Restrictive Covenants in Our Debt Documents

The Credit Agreement and the indentures governing the Subordinated Notes and Secured Notes contain restrictive covenants that, among other things, limit the incurrence of additional indebtedness, the payment of special dividends, transactions with affiliates, asset sales, acquisitions, mergers and consolidations, liens and encumbrances, and prepayments of certain other indebtedness.

The restrictive covenants included in the Credit Agreement are subject to amendments executed periodically. The most recent amendment that impacted the restrictive covenants contained in the Credit Agreement is Amendment No. 15, executed on March 22, 2024.

Under the terms of the Credit Agreement, TransDigm is entitled, on one or more occasions, to request additional term loans or additional revolving commitments to the extent that the existing or new lenders agree to provide such incremental term loans or additional revolving commitments provided that, among other conditions, our consolidated net leverage ratio would be no greater than 7.25x and the consolidated secured net debt ratio would be no greater than 5.00x, in each case, after giving effect to such incremental term loans or additional revolving commitments.

If any such default occurs, the lenders under the Credit Agreement and the holders of the Subordinated Notes and Secured Notes may elect to declare all outstanding borrowings, together with accrued interest and other amounts payable thereunder, to be immediately due and payable. The lenders under the Credit Agreement also have the right in these circumstances to terminate any commitments they have to provide further borrowings. In addition, following an event of default under the Credit Agreement, the lenders thereunder and the holders of the Secured Notes will have the right to proceed against the collateral granted to them to secure the debt, which includes our available cash, and they will also have the right to prevent us from making debt service payments on the Notes.

With the exception of the revolving credit facility, the Company has no maintenance covenants in its existing term loan and indenture agreements. Under the Credit Agreement, if the usage of the revolving credit facility exceeds 40% (or, currently, $364 million) of the total revolving commitments, the Company is required to maintain a maximum consolidated net leverage ratio of net debt to trailing four-quarter EBITDA As Defined of 7.50x (or, solely with respect to the first four fiscal quarters ending after the consummation of any material acquisition, 8.00x) as of the last day of the fiscal quarter.

As of December 27, 2025, the Company was in compliance with all of its debt covenants and expects to remain in compliance with its debt covenants in subsequent periods.

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Trade Receivable Securitization Facility

During fiscal 2014, the Company established a trade receivable securitization facility (the “Securitization Facility”). The Company’s Securitization Facility effectively increases the Company’s borrowing capacity depending on the amount of the domestic operations’ trade accounts receivable. The Securitization Facility includes the right for the Company to exercise annual one year extensions as long as there have been no termination events as defined by the agreement. The Company uses the proceeds from the Securitization Facility as an alternative to other forms of debt, effectively reducing borrowing costs.

On July 11, 2025 (fiscal 2025), the Company amended the Securitization Facility to, among other things, (i) increase the borrowing capacity from $650 million to $725 million; and (ii) extend the maturity date to July 10, 2026 at an interest rate of Term SOFR plus 1.35% compared to an interest rate of Term SOFR plus 1.45% that applied prior to the amendment.

As of December 27, 2025, the Securitization Facility was fully drawn and the applicable interest rate was 5.34%. The Securitization Facility is collateralized by substantially all of the Company’s domestic operations’ trade accounts receivable.

Contractual Obligations

We have future obligations under various contracts relating to debt and interest payments, finance and operating leases, pension and post-retirement benefit plans and purchase obligations. During the thirteen week period ended December 27, 2025, there were no material changes to these obligations as reported in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025.

Dividend and Dividend Equivalent Payments

Pursuant to the Fourth Amended and Restated TransDigm Group Incorporated 2006 Stock Incentive Plan Dividend Equivalent Plan, the Amended and Restated 2014 Stock Option Plan Dividend Equivalent Plan and the 2019 Stock Option Plan Dividend Equivalent Plan, all of the vested options granted under the existing stock option plans, except for grants to the members of the Board of Directors, are entitled to certain dividend equivalent payments in the event of the declaration of a dividend by the Company.

No dividends were declared in the thirteen week period ended December 27, 2025. Dividend equivalent payments are made during the Company's first fiscal quarter each year and also upon payment of any dividends declared. Total dividend equivalent payments in the first quarter of fiscal 2026 were approximately $59 million.

Off-Balance Sheet Arrangements

The Company utilizes letters of credit to back certain payment and performance obligations. Letters of credit are subject to limits based on amounts outstanding under the Company’s revolving credit facility. As of December 27, 2025, the Company had $51 million in letters of credit outstanding.

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Non-GAAP Financial Measures

We present below certain financial information based on our EBITDA and EBITDA As Defined. References to “EBITDA” mean earnings before interest, taxes, depreciation and amortization, and references to “EBITDA As Defined” mean EBITDA plus, as applicable for each relevant period, certain adjustments as set forth in the reconciliations of net income to EBITDA and EBITDA As Defined and the reconciliations of net cash provided by operating activities to EBITDA and EBITDA As Defined presented below.

Neither EBITDA nor EBITDA As Defined is a measurement of financial performance under U.S. GAAP. We present EBITDA and EBITDA As Defined because we believe they are useful indicators for evaluating operating performance and liquidity.

Our management believes that EBITDA and EBITDA As Defined are useful as indicators of liquidity because securities analysts, investors, rating agencies and others use EBITDA to evaluate a company’s ability to incur and service debt. In addition, EBITDA As Defined is useful to investors because the revolving credit facility under our senior secured credit facility requires compliance under certain circumstances, on a pro forma basis, with a financial covenant that measures the ratio of the amount of our secured indebtedness to the amount of our Consolidated EBITDA defined in the same manner as we define EBITDA As Defined herein.

In addition to the above, our management uses EBITDA As Defined to review and assess the performance of the management team in connection with employee incentive programs and to prepare its annual budget and financial projections. Moreover, our management uses EBITDA As Defined to evaluate acquisitions.

Although we use EBITDA and EBITDA As Defined as measures to assess the performance of our business and for the other purposes set forth above, the use of these non-GAAP financial measures as analytical tools has limitations, and you should not consider any of them in isolation, or as a substitute for analysis of our results of operations as reported in accordance with U.S. GAAP. Some of these limitations are:

•neither EBITDA nor EBITDA As Defined reflects the significant interest expense, or the cash requirements, necessary to service interest payments on our indebtedness;

•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and neither EBITDA nor EBITDA As Defined reflects any cash requirements for such replacements;

•the omission of the substantial amortization expense associated with our intangible assets further limits the usefulness of EBITDA and EBITDA As Defined;

•neither EBITDA nor EBITDA As Defined includes the payment of taxes, which is a necessary element of our operations; and

•EBITDA As Defined excludes the cash expense we have incurred to integrate acquired businesses into our operations, which is a necessary element of certain of our acquisitions.

Because of these limitations, EBITDA and EBITDA As Defined should not be considered as measures of discretionary cash available to us to invest in the growth of our business. Management compensates for these limitations by not viewing EBITDA or EBITDA As Defined in isolation and specifically by using other U.S. GAAP measures, such as net income, net sales and operating profit, to measure our operating performance. Neither EBITDA nor EBITDA As Defined is a measurement of financial performance under U.S. GAAP, and neither should be considered as an alternative to net income or cash flow from operations determined in accordance with U.S. GAAP. Our calculation of EBITDA and EBITDA As Defined may not be comparable to the calculation of similarly titled measures reported by other companies.

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The following table sets forth a reconciliation of net income to EBITDA and EBITDA As Defined (in millions):


	Thirteen Week Periods Ended
		December 27, 2025		December 28, 2024
Net Income		$	445	$	493
Adjustments:
Depreciation and amortization expense		100		90
Interest expense-net		475		378
Income tax provision		127		126
EBITDA		1,147		1,087
Adjustments:
Acquisition transaction and integration-related expenses (1)		12		13
Non-cash stock and deferred compensation expense (2)		27		25

Other, net (3)		11		(64)
EBITDA As Defined		$	1,197	$	1,061



(1)						Represents costs incurred to integrate acquired businesses into our operations; facility relocation costs and other acquisition-related costs; transaction and valuation-related costs for acquisitions comprising deal fees, legal, financial and tax due diligence expenses; and amortization expense of inventory step-up recorded in connection with the purchase accounting of acquired businesses.

(2)						Represents the compensation expense recognized under our stock option plans and deferred compensation plans.

(3)						Primarily represents foreign currency transaction gains or losses, payroll withholding taxes related to dividend equivalent payments and stock option exercises, non-service related pension costs, deferred compensation payments and other miscellaneous income or expense, such as gain on sale of business.

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The following table sets forth a reconciliation of net cash provided by operating activities to EBITDA and EBITDA As Defined (in millions):


	Thirteen Week Periods Ended
	December 27, 2025		December 28, 2024
Net cash provided by operating activities	$	832	$	752
Adjustments:
Changes in assets and liabilities, net of effects from acquisitions and sales of businesses	(250)		(156)
Interest expense-net (1)	464		369
Income tax provision-current	128		128



Gain on sale of businesses, net	—		19
Non-cash stock and deferred compensation expense (2)	(27)		(25)

EBITDA	1,147		1,087
Adjustments:
Acquisition transaction and integration-related expenses (3)	12		13
Non-cash stock and deferred compensation expense (2)	27		25

Other, net (4)	11		(64)
EBITDA As Defined	$	1,197	$	1,061



(1)						Represents interest expense, net of interest income, excluding the amortization of debt issuance costs and discount on debt.

(2)						Represents the compensation expense recognized under our stock option plans and deferred compensation plans.

(3)						Represents costs incurred to integrate acquired businesses into our operations; facility relocation costs and other acquisition-related costs; transaction and valuation-related costs for acquisitions comprising deal fees, legal, financial and tax due diligence expenses; and amortization expense of inventory step-up recorded in connection with the purchase accounting of acquired businesses.

(4)						Primarily represents foreign currency transaction gains or losses, payroll withholding taxes related to dividend equivalent payments and stock option exercises, non-service related pension costs, deferred compensation payments and other miscellaneous income or expense, such as gain on sale of business.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The information called for by this item is provided under the caption “Description of Senior Secured Term Loans and Indentures” in Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Market risks are described more fully within Quantitative and Qualitative Disclosures About Market Risk in Part II, Item 7A of our most recent Annual Report on Form 10-K (for the fiscal year ended September 30, 2025, filed on November 12, 2025). These market risks have not materially changed for the first quarter of fiscal year 2026.

ITEM 4. CONTROLS AND PROCEDURES

As of December 27, 2025, TD Group carried out an evaluation, under the supervision and with the participation of TD Group’s management, including its President and Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), of the effectiveness of the design and operation of TD Group’s disclosure controls and procedures. Based upon that evaluation, the President and Chief Executive Officer and Chief Financial Officer concluded that TD Group’s disclosure controls and procedures are effective to ensure that information required to be disclosed by TD Group in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified by the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to TD Group’s management, including its President and Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, TD Group’s management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in designing and evaluating the controls and procedures.

During the fiscal quarter ended December 27, 2025, the Company completed the acquisition of Simmonds. The Company is currently integrating the acquisition into its operations, compliance programs and internal control processes. As permitted by SEC rules and regulations, the Company has excluded the acquisition from management's evaluation of internal controls over financial reporting as of December 27, 2025.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting that occurred during the fiscal quarter ended December 27, 2025, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is involved in various claims and legal actions arising in the ordinary course of business. We believe that the outcome of these matters will not have a material adverse effect on our financial position, results of operations, or cash flows. From time to time, we are involved in matters that involve governmental authorities as a party under federal, state and local laws that have been enacted or adopted regulating the discharge of materials into the environment or primarily for the purpose of protecting the environment. We will report such matters that exceed, or that we reasonably believe may exceed, $1 million or more in monetary sanctions.

Information with respect to our legal proceedings is contained in Note 13, “Commitments and Contingencies,” in Part IV, Item 15. Exhibits and Financial Statement Schedules, of our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, filed on November 12, 2025. There have been no material changes to this information.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the risk factors disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, filed on November 12, 2025. There have been no material changes to the risk factors described in the Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS: PURCHASES OF EQUITY SECURITIES BY THE ISSUER

The following table presents information about repurchases of TransDigm Group Inc. common stock made by the Company during the first quarter of fiscal year 2026 (in millions, except shares and average price per share data):


				Total Number of Shares	Dollar Value of Shares
	Total Number	Average Price		Repurchased as Part	That May Yet Be
	of Shares	Paid		of Publicly Announced	Purchased Under the
Period	Repurchased	Per Share		Plans or Programs	Plans or Programs (1)
October 1, 2025 - October 25, 2025	79,959	$	1,249.90	79,959	$	5,688
October 26, 2025 - November 22, 2025	—	—		—	5,688
November 23, 2025 - December 27, 2025	5,253	1,247.05		5,253	5,681
Total	85,212	$	1,249.73	85,212



(1)						On January 27, 2022, our Board of Directors authorized a new stock repurchase program permitting repurchases of our outstanding shares not to exceed $2.2 billion in the aggregate, subject to any restrictions specified in the Credit Agreement and indentures governing the existing Subordinated and Secured Notes (referred to herein as the “existing stock repurchase program”), replacing the $650 million stock repurchase program. In November 2025, the Board of Directors authorized an additional $5.0 billion in share repurchases of common stock permissible under the Company’s existing stock repurchase program. There is no expiration date for the existing stock repurchase program.

ITEM 5. OTHER INFORMATION

On November 19, 2025, W. Nicholas Howley, the Company's Chairman of the Board of Directors, entered into a new “Rule 10b5-1 trading arrangement” (as defined in Item 408 of Regulation S-K) for the sale of 192,544 shares of common stock issuable upon the exercise of vested options intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act, which Rule 10b5-1 trading arrangement begins on February 18, 2026 and terminates no later than August 31, 2027.

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ITEM 6. EXHIBITS

Exhibit No.

Description

Filed Herewith or Incorporated by Reference From

22.1

Listing of Subsidiary Guarantors

Filed Herewith

31.1

Certification by Principal Executive Officer of TransDigm Group Incorporated pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed Herewith

31.2

Certification by Principal Financial Officer of TransDigm Group Incorporated pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed Herewith

32.1

Certification by Principal Executive Officer of TransDigm Group Incorporated pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Furnished Herewith

32.2

Certification by Principal Financial Officer of TransDigm Group Incorporated pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Furnished Herewith

101.INS

Inline XBRL Instance Document: The XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

Filed Herewith

101.SCH

Inline XBRL Taxonomy Extension Schema

Filed Herewith

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase

Filed Herewith

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase

Filed Herewith

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase

Filed Herewith

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase

Filed Herewith

104

Cover Page Interactive Data File: the cover page XBRL tags are embedded within the Inline XBRL document and are contained within Exhibit 101

Filed Herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

TRANSDIGM GROUP INCORPORATED

SIGNATURE

TITLE

DATE

/s/ Michael Lisman

President and Chief Executive Officer
(Principal Executive Officer)

February 3, 2026

Michael Lisman

/s/ Sarah Wynne

Chief Financial Officer
(Principal Financial Officer)

February 3, 2026

Sarah Wynne

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Date	Price Target	Rating	Analyst
11/18/2025	$1775.00	Outperform	BNP Paribas Exane
9/30/2025	$1420.00	Outperform	BMO Capital Markets
9/17/2025	$1650.00 → $1490.00	Buy	Jefferies
9/8/2025	$1385.00	Outperform → Sector Perform	RBC Capital Mkts
6/24/2025	$1710.00	Buy	Stifel
4/9/2025	$1500.00	Neutral → Buy	Northcoast
2/24/2025	$1595.00	Neutral → Buy	UBS
2/7/2025	$1375.00 → $1500.00	Equal Weight → Overweight	Wells Fargo

SEC Form 10-Q filed by Transdigm Group Incorporated

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