TransDigm (TDG) Q3 2025 Earnings Call Transcript

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Aug. 5, 2025 astatine 11 a.m. ET

• Chief Executive Officer — Kevin M. Stein

• Co-Chief Operating Officer and CEO-elect — Michael J. Lisman

• Chief Financial Officer — Sarah L. Wynne

• General Counsel and Chief Compliance Officer — Armani Vadiee

• Co-Chief Operating Officer — Joel Reese

• Executive Vice President — Patrick Murphy

• Executive Vice President — Dave Wilmot

Kevin M. Stein: Good morning. Thanks for calling successful today. First, I'll commencement disconnected with the accustomed speedy overview of our strategy, a fewer comments astir the 4th and sermon our fiscal '25 outlook. Then Mike and Sarah volition springiness further colour connected the quarter. Before we get into the concern of today, arsenic I americium nearing my status day of September 30, I wanted to concisely reiterate what a privilege it has been to service arsenic CEO of TransDigm implicit these past 7-plus years. TransDigm is an exceptional company, and it has been incredibly rewarding to witnesser its maturation and the worth it has created for shareholders.

Mike is acceptable to instrumentality the helm arsenic TransDigm's CEO, and I americium assured the institution volition beryllium successful fantabulous hands nether his leadership. Mike volition bash an outstanding occupation and proceed delivering the benignant of worth that has agelong defined TransDigm's success. Additionally, I volition stay an advisor to TransDigm to assistance successful immoderate modulation topics. Now moving connected to the concern of today. To reiterate, we judge we are unsocial successful the manufacture successful some the consistency of our strategy successful some bully times and atrocious arsenic good arsenic our dependable absorption connected intrinsic shareholder worth instauration done each phases of the aerospace cycle. To summarize, present are immoderate of the reasons wherefore we judge this.

About 90% of our nett income are generated by unsocial proprietary products. Most of our EBITDA comes from aftermarket revenues, which mostly person importantly higher margins and implicit immoderate extended play person typically provided comparative stableness successful the downturns. We travel a accordant semipermanent strategy, specifically. First, we ain and run proprietary aerospace businesses with important aftermarket content. Second, we utilize a simple, well-proven, value-based operating methodology. Third, we person a decentralized organizational operation and unsocial compensation strategy intimately aligned with shareholders. Fourth, we get businesses that acceptable this strategy and wherever we spot a wide way to PE-like returns. And lastly, our superior operation and allocation are a cardinal portion of our worth instauration methodology.

Our long-standing extremity is to springiness our shareholders backstage equity-like returns with the liquidity of a nationalist market. To bash this, we enactment focused connected some the details of worth instauration arsenic good arsenic cautious allocation of our capital. As you saw from our archetypal net release, we had a decent Q3. During the quarter, we saw a steadfast maturation successful the revenues for some our commercialized aftermarket and defence marketplace channels. Commercial OEM revenues were down this 4th compared to anterior year, which Mike volition sermon further successful his marketplace conception commentary.