Transdigm Q3 Earnings Tops Consensus, Notes Improved Margins, Dodges Outlook

TransDigm Group Inc TDG reported third-quarter sales growth of 19% year-over-year to $1.218 billion, +15% on an organic basis, versus the consensus of $1.22 billion.
Adjusted EPS improved 116% Y/Y to $3.33 from $1.54 in 3Q20, beating the consensus of $2.93.
The gross margin expanded by around 570 bps to 53.8%.
The operating income increased by 56.3% Y/Y to $447 million, and the margin expanded by around 880 bps to 36.7%.
TransDigm generated cash from operating activities year-to-date of $624 million, compared to $991 million a year ago.
EBITDA As Defined improved by 32% Y/Y to $559 million, and margin expanded by 440 bps to 45.9%.
The net gain on sale recognized during the quarter due to the ScioTeq and TREALITY and TAC divestitures was ~$68 million.
TransDigm also announced the transition of Nicholas Howley from Executive Chairman to Chairman of the Board, effective August 6, 2021. Howley intends to continue in the Chairman role through at least fiscal 2024.
The company's FY21 financial guidance remains suspended.
Price Action: TDG shares traded higher by 0.24% at $629.99 on the last check Tuesday.

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