TDG · 10-Q · 2026Q2 · Full report

Gross Margin Drivers

TransDigm Group INC · 2026-08-04 · Importance 54 · Surprise 40 · No source text

Gross profit increased 16.9% year over year to $4,491 million for the first nine months of fiscal 2026, while gross margin declined to 59.3% from 60.1%. Third-quarter gross profit increased 22.2% to $1,628 million, with gross margin essentially flat at 59.4% versus 59.5%. Cost of sales increased 20.6% to $3,078 million for the first nine months and rose to 40.7% of sales from 39.9%, primarily because fiscal 2026 and 2025 acquisitions were dilutive. Excluding acquisition dilution, higher commercial aftermarket mix, productivity and cost improvements, value-based pricing and fixed-cost absorption over higher production volumes reduced cost of sales as a percentage of sales.

Key facts

• Thirty-nine week period cost of sales: $3,078 million (40.7% of net sales) for period ended June 27, 2026, a $525 million or 20.6% increase versus prior year. source
• Thirteen week period ended June 27, 2026 cost of sales: $1,113 million (40.6% of net sales). source
• Thirteen week period ended June 27, 2026 gross profit: $1,628 million and gross profit percentage: 59.4%. source
• Thirty-nine week period gross profit: $4,491 million and gross profit percentage: 59.3% for period ended June 27, 2026. source
• Cost of sales for the thirty-nine week period ended June 27, 2026: $2,457 million source

Impact estimates