Executive Summary

Solid Q2: revenue $2.15B (+12% YoY) and adjusted EPS $9.11 (+14% YoY); EBITDA As Defined margin expanded to 54.0% (+80 bps YoY) .
Versus S&P Global consensus: EPS beat ($9.11 vs $8.95*), revenue slight miss ($2.15B vs $2.17B*), and EBITDA (S&P definition) miss ($1.09B vs $1.15B*) as consensus tracks EBITDA differently from “EBITDA As Defined” *.
FY25 outlook maintained; however, TDG raised Defense growth assumption to high-single to low-double digits and trimmed Commercial OEM growth to low-to-mid single digits; Commercial Aftermarket growth assumption unchanged (high-single to low-double digits) .
Stock catalysts: continued aftermarket strength and raised Defense outlook; conservative full-year margin stance despite 54% Q2 margin; leadership transition announced (CEO retirement with internal successor) and active M&A (Servotronics deal; later Simmonds) .

What Went Well and What Went Wrong

What Went Well
- Aftermarket and Defense drove growth; “revenue growth driven by the commercial aftermarket and defense market” with 54.0% EBITDA As Defined margin in Q2 (up ~80 bps YoY) .
- Strong bookings and leading indicators: commercial aftermarket bookings “running ahead of our expectations” and distributor point-of-sale “well into the double digits” in Q2 .
- Capital returns and M&A pipeline: $53M buybacks in Q2, $131M post-quarter; expanding pipeline and disciplined deal approach; Servotronics acquisition agreed (post-Q2); CEO succession well-planned .
What Went Wrong
- OEM still a headwind: Commercial OEM sales were about flat YoY; OEM supply chain/labor issues persist and Boeing’s recovery remains below pre-pandemic levels .
- EBITDA vs S&P consensus: EBITDA (S&P definition) below consensus in Q2, highlighting definitional differences vs TDG’s “EBITDA As Defined” (TDG reported “EBITDA As Defined” up 14% YoY to $1.162B) *.
- Conservative margin outlook implies H2 step-down vs Q2’s 54% as mix shifts to lower-margin OEM; management noted conservatism and mix impact rather than tariff headwinds .

Financial Results

Headline results by quarter (oldest → newest)

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Billions)	$2.185	$2.006	$2.150
Net Income ($USD Millions)	$468	$493	$479
GAAP EPS	$5.80	$7.62	$8.24
Adjusted EPS	$9.83	$7.83	$9.11
EBITDA As Defined ($USD Billions)	$1.149	$1.061	$1.162
EBITDA As Defined Margin %	52.6%	52.9%	54.0%
Organic Sales Growth %	12.2%	6.6%	6.9%

Actual vs S&P Global consensus

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue – Actual ($B)	$2.186	$2.006	$2.150
Revenue – Consensus ($B)	$2.172*	$2.027*	$2.168*
EPS – Actual	$9.83 (Adj.)	$7.83 (Adj.)	$9.11 (Adj.)
EPS – Consensus	$9.28*	$7.74*	$8.95*
EBITDA – Actual ($B)	$1.060 (S&P basis)*	$1.075 (S&P basis)*	$1.086 (S&P basis)*
EBITDA – Consensus ($B)	$1.127*	$1.057*	$1.153*

Values marked with * retrieved from S&P Global.

Market channel YoY growth (management commentary)

Channel (YoY)	Q4 2024	Q1 2025	Q2 2025
Commercial OEM	+13%	-4%	~Flat
Commercial Aftermarket	+8%	+9%	+13%
Defense (Total)	+16%	+11%	+9%

KPIs and balance sheet (quarter-end unless noted)

KPI	Q4 2024	Q1 2025	Q2 2025
Cash & Equivalents ($B)	$6.261	$2.459	$2.426
Net Debt / EBITDA (x)	4.4x (5.4x pro forma dividend)	5.3x	~5.1x
Share Repurchase	Special dividend $75/sh paid Oct-2024	~$316M buybacks	~$53M buybacks; +$131M post-quarter
Organic Growth %	12.2%	6.6%	6.9%

Notes: S&P EBITDA reflects a standardized definition; TDG’s “EBITDA As Defined” is a non-GAAP metric reconciled in press releases .

Guidance Changes

Metric	Period	Previous Guidance (Feb 4, 2025)	Current Guidance (May 6, 2025)	Change
Net Sales	FY 2025	$8.75B–$8.95B	$8.75B–$8.95B	Maintained
GAAP Net Income	FY 2025	$1.925B–$2.037B	$1.925B–$2.037B	Maintained
GAAP EPS	FY 2025	$32.27–$34.19	$32.27–$34.19	Maintained
EBITDA As Defined	FY 2025	$4.615B–$4.755B (~52.9% margin)	$4.615B–$4.755B (~52.9% margin)	Maintained
Adjusted EPS	FY 2025	$35.51–$37.43	$35.51–$37.43	Maintained
Weighted Avg Shares	FY 2025	58.15M	58.15M	Maintained
Commercial OEM Revenue Growth Assumption	FY 2025	Mid-single-digit %	Low to mid-single-digit %	Lowered
Defense Revenue Growth Assumption	FY 2025	High single-digit %	High single-digit to low double-digit %	Raised
Commercial Aftermarket Revenue Growth Assumption	FY 2025	High single-digit to low double-digit %	High single-digit to low double-digit %	Maintained

Earnings Call Themes & Trends

Topic	Q4 2024 (Q-2)	Q1 2025 (Q-1)	Q2 2025 (Current)	Trend
Commercial Aftermarket	8% YoY; POS near +20%; engine-heavy units strongest	+9% YoY; engine content outperformed; POS double-digit	+13% YoY; bookings ahead, POS well into double digits	Strengthening; engine-led
Commercial OEM / Boeing	Strike impact to supply chain; conservative FY25 OEM assumptions	OEM -4% YoY; proactive cost actions; cautious ramp	OEM ~flat YoY; improving but below pre-pandemic; still cautious	Gradual improvement; cautious
Defense	+16% Q4; +19% FY24; strong bookings	+11% YoY; healthy bookings	+9% YoY; bookings outpaced sales; FY outlook raised	Positive; outlook raised
Tariffs	—	De minimis exposure; largely domestic manufacturing	Not a material headwind; mitigations in place	Manageable
Capital Allocation	$75 special dividend; ample liquidity	~$300M buybacks; leverage comfort 5–7x	Q2 $53M + $131M April buybacks; FCF ~$2.3B FY guide	Active, opportunistic
M&A	Busy pipeline; disciplined returns	Pipeline expanding; disciplined	Servotronics deal (post-Q2); continued pipeline	Continuing
Leadership	—	—	CEO retirement; Mike Lisman named successor (Oct 1, 2025)	Planned transition

Management Commentary

“Revenue growth [was] driven by the commercial aftermarket and defense market… [EBITDA As Defined] margin improved to 54.0%” .
“Commercial OEM revenues… about flat… Sequentially, both revenues and bookings improved… Boeing production rates are still well below pre-pandemic levels” .
“We are maintaining our previously issued fiscal 2025 financial guidance… [and] revised [assumptions]: Commercial OEM low to mid-single digits; Defense high single-digit to low double-digit” .
Tariffs: “We do not anticipate a material headwind… [TDG is] largely a domestic manufacturer with limited exposure to low-cost country sources” .
Capital returns: “We opportunistically deployed just over $50 million… [and] about $130 million [post-quarter]… expect [repurchases] will meet or exceed our long-term return objectives” .
CEO succession: “I will retire at the end of… 2025 fiscal year… Mike Lisman… will be our new CEO effective October 1, 2025” .

Q&A Highlights

EBITDA/margin outlook: Implied H2 margin step-down vs Q2 reflects conservatism and mix shift (OEM pickup); no tariff headwind assumed .
Tariffs and pricing: Tariffs currently “very small” impact; standard value drivers including pricing remain available if needed .
Capital deployment: Continued balance of M&A with opportunistic buybacks/special dividends; priority order remains reinvestment, M&A, return of capital .
M&A posture: Broad aerospace scope (including software where returns fit); disciplined at 20% IRR hurdle; discussed but passed on certain assets (e.g., Jeppesen) due to valuation/fit .
Defense strength: Broad-based across OEM and aftermarket; bookings support elevated outlook .

Estimates Context

Q2 2025 vs S&P Global consensus: Adjusted EPS beat ($9.11 vs $8.95*), revenue slight miss ($2.15B vs $2.17B*), and EBITDA (S&P definition) miss ($1.09B vs $1.15B*). For Q1 2025, adjusted EPS beat ($7.83 vs $7.74*) with revenue miss ($2.01B vs $2.03B*) and EBITDA (S&P) beat ($1.08B vs $1.06B*) *.
Implications: Maintained FY25 guide plus stronger aftermarket/Defense could lift EPS estimates modestly if 54% Q2 margins prove repeatable; however, management’s conservative H2 margin view and OEM mix may temper EBITDA revisions. Values retrieved from S&P Global.

Key Takeaways for Investors

Core engine: Aftermarket momentum and rising Defense outlook underpin growth; bookings and distributor POS trends remain constructive into Q3 .
Margin quality: 54% EBITDA As Defined margin demonstrates operating leverage; full-year margin conservatism reflects OEM mix, not underlying deterioration .
OEM watchlist: Boeing/Airbus rate normalization remains a swing factor; TDG’s decentralized ops and proactive cost actions mitigate volatility .
Capital returns optionality: Strong FCF (~$2.3B FY25 guide) and liquidity support continued buybacks/specials alongside M&A; leverage within 5–7x comfort band .
Leadership continuity: Planned CEO transition to internal successor suggests strategic consistency; not a change in playbook .
M&A catalysts: Servotronics (and later Simmonds) fit the model—proprietary, aftermarket-heavy; discipline remains key amid elevated multiples .
Estimate bias: With guide intact but Defense raised and aftermarket strong, directional bias for EPS revisions modestly positive, contingent on H2 mix.

Additional Press Releases (Q2 FY25 window)

CEO retirement and succession announcement (Kevin Stein to retire; Mike Lisman to become CEO Oct 1, 2025) .
Servotronics acquisition agreement ($110M cash; servo valves; ~80% commercial aerospace revenue; proprietary, aftermarket content) .
Post-quarter: Simmonds Precision Products acquisition agreement from RTX ($765M cash; fuel/proximity sensing, structural health monitoring; ~40% aftermarket revenue) .

Notes on non-GAAP: TDG’s “EBITDA As Defined” and adjusted EPS are non-GAAP measures with detailed reconciliations provided in the earnings release and 8‑K . The S&P Global EBITDA and consensus figures may not align to TDG’s “EBITDA As Defined.”

Citations:

Q2 2025 press release and financial tables .
8‑K (Item 2.02) with Exhibit 99.1 (press release) .
Q2 2025 earnings call transcript (prepared remarks and Q&A) .
Q1 2025 press release and call .
Q4 2024 press release and call .

S&P Global consensus and actuals where shown are marked with * and sourced from S&P Global.

TransDigm Group INC (TDG)·Q2 2025 Earnings Summary