TDG · 10-K · 2026A · Full report
Gross Margin Drivers
TransDigm Group INC · 2026-11-10 · Importance 54 · Surprise 40 · No source text
Fiscal 2026 gross profit increased 17.8% to $6,254 million, but gross margin declined from 60.1% to 59.2%. Cost of sales rose 22.2% to $4,303 million, including a 22.2% increase in cost of sales excluding depreciation, acquisition-related costs, stock compensation and foreign currency losses. Fiscal 2026 acquisitions diluted gross margin; favorable mix, particularly higher commercial aftermarket sales, productivity and cost improvements, and fixed overhead spread over higher production volume partly offset the dilution.
Key facts
- Fiscal 2026 cost of sales increased $783 million, or 22.2%, to $4,303 million from $3,520 million in fiscal 2025. source
- Fiscal 2026 gross profit was $6,254 million, up 17.8% from $5,311 million in fiscal 2025, while gross profit margin declined from 60.1% to 59.2%. source
- Fiscal 2026 cost of sales increased as a percentage of net sales primarily because of the dilutive gross-margin impact of fiscal 2026 acquisitions; favorable sales mix, especially higher commercial aftermarket sales as a share of net sales, value-driver execution, and fixed overhead spread over higher production volume partly offset the impact. source
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| operating_income | negative | realized | -7.4% | Fiscal 2026 cost of sales increased $783 million, or 22.2%, to $4,303 million from $3,520 million in fiscal 2025. |
| margin | negative | realized | -0.9% | Fiscal 2026 gross profit was $6,254 million, up 17.8% from $5,311 million in fiscal 2025, while gross profit margin declined from 60.1% to… |