TransDigm Tops Q3 Estimates, Raises FY23 Guidance On Favorable Trends In Commercial Aerospace Market

TransDigm Group Inc TDG reported third-quarter FY23 sales growth of 25% year-over-year to $1.74 billion, +20.7% on an organic basis, beating the consensus of $1.68 billion.

Adjusted EPS improved 49% Y/Y to $7.25, beating the consensus of $6.33.

Gross margin expanded by 63 bps to 59%. The operating income increased by 30.7% Y/Y to $783 million, and the margin expanded by 205 bps to 44.9%.

Income from continuing operations increased 47.3% Y/Y to $352 million.

EBITDA, as Defined, increased by 31.5% Y/Y to $915 million, and the margin expanded by 268 bps to 52.5%.

TransDigm generated cash from operating activities year-to-date of $913 million, compared to $675 million a year ago. It held cash and equivalents of $3.07 billion as of July 1, 2023.

"We continued to see strong Company performance along with further progression in the commercial aerospace market recovery. As we advance towards the end of our fiscal year, we are optimistic that the favorable trends in the commercial aerospace market will continue," stated Kevin Stein, TransDigm Group's President and Chief Executive Officer.

The company raised its full-year guidance primarily to reflect third-quarter solid results and current expectations for the remainder of the fiscal year.

FY23 Outlook raised: TransDigm now expects net sales of $6.525 billion-$6.585 billion (prior $6.41 billion-$6.5 billion), versus consensus of $6.46 billion, and EPS from continuing operations of $20.78-$21.20 (prior $19.30-$20.18).

It sees EBITDA As Defined of $3.35 billion- $3.38 billion (prior $3.23 billion- $3.29 billion).

Adjusted EPS of $24.94-$25.36 (prior $23.31-$24.19) versus consensus of $23.98.

Price Action: TDG shares are trading lower by 1.87% at $897.07 on the last check Tuesday.