Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-looking Statements

The following discussion of the Company’s financial condition and results of operations should be read together with TD Group’s condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q. References in this section to “TransDigm,” “the Company,” “we,” “us,” “our,” and similar references refer to TD Group, TransDigm Inc. and TransDigm Inc.’s subsidiaries, unless the context otherwise indicates.

This Quarterly Report on Form 10-Q contains both historical and “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and 27A of the Securities Act of 1933, as amended. All statements other than statements of historical fact included that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements, including, in particular, the statements about our plans, objectives, strategies and prospects regarding, among other things, our financial condition, results of operations and business. We have identified some of these forward-looking statements with words like “believe,” “may,” “will,” “should,” “expect,” “intend,” “plan,” “predict,” “anticipate,” “estimate” or “continue” and other words and terms of similar meaning. These forward-looking statements may be contained throughout this Quarterly Report on Form 10-Q. These forward-looking statements are based on current expectations about future events affecting us and are subject to uncertainties and factors relating to, among other things, our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we do not know whether our expectations will prove correct. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties, including the risks described in Item 1A, “Risk Factors,” of the Annual Report on Form 10-K. Since our actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements, we cannot give any assurance that any of the events anticipated by these forward-looking statements will occur or, if any of them does occur, what impact they will have on our business, results of operations and financial condition. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. We do not undertake any obligation to update these forward-looking statements or the risk factors contained in this Quarterly Report on Form 10-Q to reflect new information, future events or otherwise, except as may be required under federal securities laws.

Important factors that could cause actual results to differ materially from the forward-looking statements made in this Quarterly Report on Form 10-Q include but are not limited to: the sensitivity of our business to the number of flight hours that our customers’ planes spend aloft and our customers’ profitability, both of which are affected by general economic conditions; supply chain constraints; increases in raw material costs, taxes and labor costs that cannot be recovered in product pricing; failure to complete or successfully integrate acquisitions; our indebtedness; current and future geopolitical or other worldwide events, including, without limitation, wars or conflicts and public health crises; cybersecurity threats; risks related to the transition or physical impacts of climate change and other natural disasters or meeting regulatory requirements; our reliance on certain customers; the United States (“U.S.”) defense budget and risks associated with being a government supplier including government audits and investigations; failure to maintain government or industry approvals; risks related to changes in laws and regulations, including increases in compliance costs and potential changes in trade policies and tariffs; potential environmental liabilities; liabilities arising in connection with litigation; risks and costs associated with our international sales and operations; and other factors. Refer to Part II, Item 1A included in this Quarterly Report on Form 10-Q and to Part I, Item 1A of the Annual Report on Form 10-K for additional information regarding the foregoing factors that may affect our business.

Overview

We believe we are a leading global designer, producer and supplier of highly engineered proprietary aerospace components with significant aftermarket content. We seek to develop highly customized products to solve specific needs for aircraft operators and manufacturers. We attempt to differentiate ourselves based on engineering, service and manufacturing capabilities. We believe that our products have strong brand names within the industry and that we have a reputation for high quality, reliability and strong customer support. We believe we have achieved steady, long-term growth in sales and improvements in operating performance due to our competitive strengths and through execution of our value-driven operating strategy. More specifically, focusing our businesses on our value-driven operating strategy of obtaining profitable new business, carefully controlling the cost structure via productivity and cost improvements and pricing our highly engineered value-added products to fairly reflect the value we provide and the resources required to do so has historically resulted in improvements in gross profit and income from operations over the long-term.

Our selective acquisition strategy has also been an important contribution to the growth of our business. We maintain a selective acquisition strategy, concentrating on proprietary commercial aerospace component businesses with significant aftermarket content where we see a clear path to value creation through the application of our three core value drivers. The integration of acquisitions into our existing businesses combined with implementing our proven operating strategy has historically resulted in improvements in the financial performance of the acquired businesses.

For the second quarter of fiscal 2026, we generated net sales of $2,544 million and net income attributable to TD Group of $535 million. EBITDA As Defined was $1,337 million, or 52.6% of net sales. Refer to the “Non-GAAP Financial Measures” section for certain information regarding EBITDA and EBITDA As Defined, including reconciliations of EBITDA and EBITDA As Defined to net income and net cash provided by operating activities.

For the first half of fiscal 2026, demand for air travel remained strong both domestically and internationally. Commercial aftermarket sales increased in the first half of fiscal 2026 compared to fiscal 2025 primarily due to the overall demand for air travel - both domestic and international. Passenger load factors remain strong.

Our commercial transport original equipment manufacturer (“OEM”) shipments and revenues generally run ahead of aircraft delivery schedules. Consistent with prior years, our first half of fiscal 2026 shipments were a function of, among other things, the estimated 2025 and 2026 commercial aircraft production rates for Boeing and Airbus. Airline demand for new aircraft remains high and the OEMs continue to increase aircraft production. Commercial OEM sales increased in the first half of fiscal 2026 compared to fiscal 2025 partially due to the prior year Boeing union strike adversely impacting fiscal 2025 OEM sales, as well as overall increases beginning in the latter half of fiscal 2025 and thus far in fiscal 2026 in aircraft production and deliveries by the OEMs.

Our defense business fluctuates from year-to-year, and is dependent, to a degree, on government budget constraints, the timing of orders, macro and micro dynamics with respect to the U.S. Department of War (“DOW”) procurement policy and the extent of global conflicts. Likewise, delays in government spending outlays and government funding reprioritization can impact demand. For a variety of reasons, the military spending outlook is very uncertain, though recent DOW budgets have trended upwards due to recent geopolitical challenge and conflicts, and current military modernization efforts. Defense sales increased in the first half of fiscal 2026 compared to fiscal 2025 primarily due to continued growth in defense spending in both domestic and international markets.

The ongoing conflict in the Middle East could lead to significant disruption of global energy supplies and increases in global energy prices, adversely affect global supply chains, heighten inflationary pressures and adversely affect commercial air travel. To date, we have not seen a significant change in commercial aftermarket ordering activity relative to levels prior to the start of the conflict. We are continuing to monitor the evolving macroeconomic environment, however at this time we do not expect these factors to result in a material adverse effect on our business, financial condition and results of operations.

Critical Accounting Policies and Estimates

The preparation and fair presentation of the consolidated unaudited interim financial statements and accompanying notes included in this report are the responsibility of management. The financial statements and footnotes have been prepared in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial statements and contain certain amounts that were based upon management’s best estimates, judgments and assumptions that were believed to be reasonable under the circumstances. On an ongoing basis, we evaluate the accounting policies and estimates used to prepare financial statements. Estimates are based on historical experience, judgments and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates used by management.

A comprehensive discussion of the Company’s critical accounting policies and management estimates and significant accounting policies followed in the preparation of the financial statements is included in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, filed on November 12, 2025. Refer to Note 1, “Basis of Presentation,” in the notes to the condensed consolidated financial statements included herein for further disclosure of accounting standards recently adopted or required to be adopted in the future.

Acquisitions

Recent acquisitions are described in Note 2, “Acquisitions,” in the notes to the condensed consolidated financial statements included herein.

Results of Operations

The following table sets forth, for the periods indicated, certain operating data of the Company, including presentation of the amounts as a percentage of net sales (amounts in millions, except per share data):

			Thirteen Week Periods Ended
			March 28, 2026						% of Net Sales						March 29, 2025						% of Net Sales
Net sales			$	2,544					100.0		%				$	2,150					100.0		%
Cost of sales			1,033						40.6		%				876						40.7		%
Selling and administrative expenses			273						10.7		%				236						11.0		%
Amortization of intangible assets			60						2.4		%				47						2.2		%
Income from operations			1,178						46.3		%				991						46.1		%
Interest expense-net			484						19.0		%				378						17.6		%
Other income			(6)						(0.2)		%				(9)						(0.4)		%
Income tax provision			164						6.4		%				143						6.7		%
Income from continuing operations			536						21.1		%				479						22.3		%
Less: Net income attributable to noncontrolling interests			(1)						—		%				—						—		%
Net income attributable to TD Group			$	535					21.0		%				$	479					22.3		%
Net income applicable to TD Group common stockholders			$	535		(1)			21.0		%				$	479		(1)			22.3		%
Earnings per share attributable to TD Group common stockholders:
Basic and diluted			$	9.20		(2)									$	8.24		(2)
Weighted-average shares outstanding—basic and diluted			58.2												58.1
Other Data:
EBITDA			$	1,289		(3)									$	1,089		(3)
EBITDA As Defined			$	1,337		(3)			52.6		%				$	1,162		(3)			54.0		%

(1)Net income applicable to TD Group common stockholders represents net income attributable to TD Group less special dividends declared or paid on participating securities, including dividend equivalents. No special dividends were declared or paid on participating securities, including dividend equivalent payments, for the thirteen week periods ended March 28, 2026 and March 29, 2025.

(2)Earnings per share is calculated by dividing net income applicable to TD Group common stockholders by the basic and diluted weighted average common shares outstanding. Figures in the table may not recalculate exactly due to rounding. Earnings per share is calculated using unrounded numbers.

(3)Refer to “Non-GAAP Financial Measures” in this discussion and analysis for additional information and limitations regarding these non-GAAP financial measures, including a reconciliation to the comparable U.S. GAAP financial measure.

			Twenty-Six Week Periods Ended
			March 28, 2026						% of Net Sales						March 29, 2025						% of Net Sales
Net sales			$	4,828					100.0		%				$	4,156					100.0		%
Cost of sales			1,965						40.7		%				1,647						39.6		%
Selling and administrative expenses			527						10.9		%				447						10.8		%
Amortization of intangible assets			116						2.4		%				97						2.3		%
Income from operations			2,220						46.0		%				1,965						47.3		%
Interest expense-net			959						19.9		%				756						18.2		%
Other income			(11)						(0.2)		%				(32)						(0.8)		%
Income tax provision			291						6.0		%				269						6.5		%
Income from continuing operations			981						20.3		%				972						23.4		%
Less: Net income attributable to noncontrolling interests			(1)						—		%				—						—		%
Net income attributable to TD Group			$	980					20.3		%				$	972					23.4		%
Net income applicable to TD Group common stockholders			$	921		(1)			19.1		%				$	923		(1)			22.2		%
Earnings per share attributable to TD Group common stockholders:
Basic and diluted			$	15.82		(2)									$	15.86		(2)
Weighted-average shares outstanding—basic and diluted			58.2												58.2
Other Data:
EBITDA			$	2,436		(3)									$	2,176		(3)
EBITDA As Defined			$	2,534		(3)			52.5		%				$	2,224		(3)			53.5		%

(1)Net income applicable to TD Group common stockholders represents net income attributable to TD Group less special dividends declared or paid on participating securities, including dividend equivalent payments of $59 million and $49 million for the twenty-six week periods ended March 28, 2026 and March 29, 2025, respectively.

(2)Earnings per share is calculated by dividing net income applicable to TD Group common stockholders by the basic and diluted weighted average common shares outstanding. Figures in the table may not recalculate exactly due to rounding. Earnings per share is calculated using unrounded numbers.

(3)Refer to “Non-GAAP Financial Measures” in this discussion and analysis for additional information and limitations regarding these non-GAAP financial measures, including a reconciliation to the comparable U.S. GAAP financial measure.

Changes in Results of Operations

Thirteen week period ended March 28, 2026 compared with the thirteen week period ended March 29, 2025

Total Company

• Net Sales****.** Net organic sales and acquisition sales and the related dollar and percentage changes for the thirteen week periods ended March 28, 2026 and March 29, 2025 were as follows (amounts in millions):

			Thirteen Week Periods Ended																		% Change Net Sales
			March 28, 2026						March 29, 2025						Change
Organic sales			$	2,388					$	2,150					$	238					11.0		%
Acquisition sales			156						—						156						7.3		%
Net sales			$	2,544					$	2,150					$	394					18.3		%

Organic sales represent net sales from existing businesses owned by the Company, excluding sales from acquisitions. Acquisition sales represent net sales from acquired businesses for the period up to one year from the respective acquisition date. We believe this measure provides investors with a supplemental understanding of underlying sales trends by providing sales growth on a consistent basis. Refer to Note 2, “Acquisitions,” in the notes to the condensed consolidated financial statements included herein for information on the Company's recent acquisitions.

The increase in organic sales of $238 million for the thirteen week period ended March 28, 2026 compared to the thirteen week period ended March 29, 2025 is related to increases in defense, commercial aftermarket and commercial OEM sales.

• Cost of Sales and Gross Profit****.** Cost of sales increased by $157 million, or 17.9%, to $1,033 million for the thirteen week period ended March 28, 2026 compared to $876 million for the thirteen week period ended March 29, 2025. Cost of sales and the related percentage of net sales for the thirteen week periods ended March 28, 2026 and March 29, 2025 were as follows (amounts in millions):

			Thirteen Week Periods Ended
			March 28, 2026						March 29, 2025						Change						% Change
Cost of sales - excluding costs below			$	999					$	830					$	169					20.4		%
% of net sales			39.3		%				38.6		%
Depreciation			35						31						4						12.9		%
% of net sales			1.4		%				1.4		%
Non-cash stock and deferred compensation expense			2						5						(3)						60.0		%
% of net sales			0.1		%				0.2		%
Foreign currency (gains) losses			(3)						10						(13)						(130.0)		%
% of net sales			(0.1)		%				0.5		%
Total cost of sales			$	1,033					$	876					$	157					17.9		%
% of net sales			40.6		%				40.7		%
Gross profit (Net sales less Total cost of sales)			$	1,511					$	1,274					$	237					18.6		%
Gross profit percentage (Gross profit / Net sales)			59.4		%				59.3		%

Cost of sales during the thirteen week period ended March 28, 2026 decreased as a percentage of net sales. This was primarily driven by the application of our three core value-driven operating strategy (obtaining profitable new business, continually improving our cost structure and providing highly engineered value-added products to customers) coupled with fixed overhead costs spread over a higher production volume; partially offset by the dilutive impact of the recent acquisitions.

• Selling and Administrative Expenses.** Selling and administrative expenses increased by $37 million to $273 million for the thirteen week period ended March 28, 2026. The related percentage of net sales for the thirteen week periods ended March 28, 2026 and March 29, 2025 were as follows (amounts in millions):

			Thirteen Week Periods Ended
			March 28, 2026						March 29, 2025						Change						% Change
Selling and administrative expenses - excluding costs below			$	240					$	188					$	52					27.7		%
% of net sales			9.4		%				8.7		%
Non-cash stock and deferred compensation expense			24						43						(19)						(44.2)		%
% of net sales			0.9		%				2.0		%
Acquisition transaction and integration-related expenses			9						5						4						80.0		%
% of net sales			0.4		%				0.2		%
Total selling and administrative expenses			$	273					$	236					$	37					15.7		%
% of net sales			10.7		%				11.0		%

Selling and administrative expenses as a percentage of net sales for the thirteen week period ended March 28, 2026 decreased as a percentage of net sales primarily due to the decrease in non-cash stock and deferred compensation expense; partially offset by the impact of higher net sales, higher research and development and general and administrative expenses.

• Interest Expense-net.** Interest expense-net includes interest on borrowings outstanding, amortization of debt issuance costs, original issue discount, revolving credit facility fees, finance leases, interest income and the impact of interest rate swaps and collars designated and qualifying as cash flow hedges. Interest expense-net increased $106 million, or 28.0%, to $484 million for the thirteen week period ended March 28, 2026 from $378 million for the comparable thirteen week period in the prior fiscal year. The increase in interest expense-net was primarily due to an increase in outstanding borrowings. The weighted average interest rate for cash interest payments on total borrowings outstanding was 6.2% and 6.1% for the thirteen week periods ended March 28, 2026 and March 29, 2025, respectively.

• Income Tax Provision.** Income tax expense as a percentage of income before income taxes was approximately 23.4% for the thirteen week period ended March 28, 2026 compared to 23.0% for the thirteen week period ended March 29, 2025. Refer to Note 9, “Income Taxes”, in the notes to the condensed consolidated financial statements included herein for additional information.

• Earnings per Share.** Basic and diluted earnings per share was $9.20 for the thirteen week period ended March 28, 2026 and $8.24 for the thirteen week period ended March 29, 2025.

Business Segments

• Segment Net Sales****.** Net sales by segment for the thirteen week periods ended March 28, 2026 and March 29, 2025 were as follows (amounts in millions):

			Thirteen Week Periods Ended
			March 28, 2026						% of Net Sales						March 29, 2025						% of Net Sales						Change						% Change
Power & Control			$	1,366					53.7		%				$	1,108					51.5		%				$	258					23.3		%
Airframe			1,133						44.5		%				1,002						46.6		%				131						13.1		%
Non-aviation			45						1.8		%				40						1.9		%				5						12.5		%
Net sales			$	2,544					100.0		%				$	2,150					100.0		%				$	394					18.3		%

Net sales for the Power & Control segment increased $258 million primarily from increases in sales in defense, commercial aftermarket and commercial OEM.

Net sales for the Airframe segment increased $131 million primarily from increases in sales in commercial aftermarket, defense and commercial OEM.

• EBITDA As Defined****.** Refer to “Non-GAAP Financial Measures” in this discussion and analysis for additional information and limitations regarding these non-GAAP financial measures, including a reconciliation to the comparable U.S. GAAP financial measure. EBITDA As Defined by segment for the thirteen week periods ended March 28, 2026 and March 29, 2025 were as follows (amounts in millions):

			Thirteen Week Periods Ended
			March 28, 2026						% of Segment Net Sales						March 29, 2025						% of Segment Net Sales						Change						% Change
Power & Control			$	734					53.7		%				$	636					57.4		%				$	98					15.4		%
Airframe			613						54.1		%				529						52.8		%				84						15.9		%
Non-aviation			19						42.2		%				16						40.0		%				3						18.8		%
Total segment EBITDA As Defined			1,366						53.7		%				1,181						54.9		%				185						15.7		%
Less: Unallocated corporate EBITDA As Defined			29						1.1		%	(1)			19						0.9		%	(1)			10						52.6		%
Total Company EBITDA As Defined			$	1,337					52.6		%	(1)			$	1,162					54.0		%	(1)			$	175					15.1		%

(1)Calculated as a percentage of consolidated net sales.

EBITDA As Defined for the Power & Control and Airframe segments increased $98 million and $84 million, respectively, due to the increase in net sales described above, along with our application of our three core value-driven operating strategy.

Unallocated corporate EBITDA As Defined consists primarily of corporate expenses which includes compensation, benefits, professional services and other administrative costs incurred by our corporate offices.

Twenty-six week period ended March 28, 2026 compared with the twenty-six week period ended March 29, 2025

Total Company

• Net Sales****.** Net organic sales and acquisition sales and the related dollar and percentage changes for the twenty-six week periods ended March 28, 2026 and March 29, 2025 were as follows (amounts in millions):

			Twenty-Six Week Periods Ended																		% Change Net Sales
			March 28, 2026						March 29, 2025						Change
Organic sales			$	4,542					$	4,156					$	386					9.3		%
Acquisition sales			286						—						286						6.9		%
Net sales			$	4,828					$	4,156					$	672					16.2		%

Organic sales represent net sales from existing businesses owned by the Company, excluding sales from acquisitions. Acquisition sales represent net sales from acquired businesses for the period up to one year from the respective acquisition date. We believe this measure provides investors with a supplemental understanding of underlying sales trends by providing sales growth on a consistent basis. Refer to Note 2, “Acquisitions,” in the notes to the condensed consolidated financial statements included herein for information on the Company's recent acquisitions.

The increase in organic sales of $386 million for the twenty-six week period ended March 28, 2026 compared to the twenty-six week period ended March 29, 2025 is related to increases in defense, commercial aftermarket and commercial OEM sales.

• Cost of Sales and Gross Profit****.** Cost of sales increased by $318 million, or 19.3%, to $1,965 million for the twenty-six week period ended March 28, 2026 compared to $1,647 million for the twenty-six week period ended March 29, 2025. Cost of sales and the related percentage of net sales for the twenty-six week periods ended March 28, 2026 and March 29, 2025 were as follows (amounts in millions):

			Twenty-Six Week Periods Ended
			March 28, 2026						March 29, 2025						Change						% Change
Cost of sales - excluding costs below			$	1,888					$	1,589					$	299					18.8		%
% of net sales			39.1		%				38.2		%
Depreciation			69						61						8						13.1		%
% of net sales			1.4		%				1.5		%
Non-cash stock and deferred compensation expense			5						7						(2)						(28.6)		%
% of net sales			0.1		%				0.2		%
Foreign currency losses (gains)			3						(10)						13						130.0		%
% of net sales			0.1		%				(0.2)		%
Total cost of sales			$	1,965					$	1,647					$	318					19.3		%
% of net sales			40.7		%				39.6		%
Gross profit (Net sales less Total cost of sales)			$	2,863					$	2,509					$	354					14.1		%
Gross profit percentage (Gross profit / Net sales)			59.3		%				60.4		%

Cost of sales during the twenty-six week period ended March 28, 2026 increased as a percentage of net sales. This was primarily driven by the dilutive impact of the recent acquisitions. Excluding the dilutive impact from these acquisitions, cost of sales as a percentage of net sales decreased due to the application of our three core value-driven operating strategy (obtaining profitable new business, continually improving our cost structure and providing highly engineered value-added products to customers) coupled with fixed overhead costs spread over a higher production volume.

• Selling and Administrative Expenses.** Selling and administrative expenses increased by $80 million to $527 million for the twenty-six week period ended March 28, 2026. The related percentage of net sales for the twenty-six week periods ended March 28, 2026 and March 29, 2025 were as follows (amounts in millions):

			Twenty-Six Week Periods Ended
			March 28, 2026						March 29, 2025						Change						% Change
Selling and administrative expenses - excluding costs below			$	465					$	371					$	94					25.3		%
% of net sales			9.6		%				8.9		%
Non-cash stock and deferred compensation expense			48						66						(18)						(27.3)		%
% of net sales			1.0		%				1.6		%
Acquisition transaction and integration-related expenses			14						10						4						40.0		%
% of net sales			0.3		%				0.2		%
Total selling and administrative expenses			$	527					$	447					$	80					17.9		%
% of net sales			10.9		%				10.8		%

Selling and administrative expenses as a percentage of net sales for the twenty-six week period ended March 28, 2026 increased as a percentage of net sales, compared to the twenty-six week period ended March 29, 2025 due to the impact of higher net sales, the recent acquisitions and higher research and development and general and administrative expenses. This was partially offset by lower non-cash stock and deferred compensation expense.

• Interest Expense-net.** Interest expense-net includes interest on borrowings outstanding, amortization of debt issuance costs, original issue discount, revolving credit facility fees, finance leases, interest income and the impact of interest rate swaps and collars designated and qualifying as cash flow hedges. Interest expense-net increased $203 million, or 26.9%, to $959 million for the twenty-six week period ended March 28, 2026 from $756 million for the comparable twenty-six week period in the prior fiscal year. The increase in interest expense-net was primarily due to an increase in outstanding borrowings and a decrease in interest income. The weighted average interest rate for cash interest payments on total borrowings outstanding was 6.3% and 6.2% for the twenty-six week period ended March 28, 2026 and March 29, 2025, respectively.

• Income Tax Provision.** Income tax expense as a percentage of income before income taxes was approximately 22.9% for the twenty-six week period ended March 28, 2026 compared to 21.7% for the twenty-six week period ended March 29, 2025. Refer to Note 9, “Income Taxes”, in the notes to the condensed consolidated financial statements included herein for additional information.

• Earnings per Share.** Basic and diluted earnings per share was $15.82 for the twenty-six week period ended March 28, 2026 and $15.86 for the twenty-six week period ended March 29, 2025. Net income attributable to TD Group for the twenty-six week period ended March 28, 2026 of $980 million was decreased by dividend equivalent payments of $59 million, or $1.02 per share, resulting in net income applicable to TD Group common stockholders of $921 million. Net income attributable to TD Group for the twenty-six week period ended March 29, 2025 of $972 million was decreased by dividend equivalent payments of $49 million, or $0.83 per share, resulting in net income applicable to TD Group common stockholders of $923 million.

Business Segments

• Segment Net Sales****.** Net sales by segment for the twenty-six week periods ended March 28, 2026 and March 29, 2025 were as follows (amounts in millions):

			Twenty-Six Week Periods Ended
			March 28, 2026						% of Net Sales						March 29, 2025						% of Net Sales						Change						% Change
Power & Control			$	2,590					53.6		%				$	2,134					51.3		%				$	456					21.4		%
Airframe			2,153						44.6		%				1,949						46.9		%				204						10.5		%
Non-aviation			85						1.8		%				73						1.8		%				12						16.4		%
Net sales			$	4,828					100.0		%				$	4,156					100.0		%				$	672					16.2		%

Net sales for the Power & Control segment increased $456 million primarily from increases in sales in defense, commercial OEM and commercial aftermarket.

Net sales for the Airframe segment increased $204 million primarily from increases in sales in commercial OEM, commercial aftermarket and defense.

• EBITDA As Defined****.** Refer to “Non-GAAP Financial Measures” in this discussion and analysis for additional information and limitations regarding these non-GAAP financial measures, including a reconciliation to the comparable U.S. GAAP financial measure. EBITDA As Defined by segment for the twenty-six week periods ended March 28, 2026 and March 29, 2025 were as follows (amounts in millions):

			Twenty-Six Week Periods Ended
			March 28, 2026						% of Segment Net Sales						March 29, 2025						% of Segment Net Sales						Change						% Change
Power & Control			$	1,389					53.6		%				$	1,222					57.3		%				$	167					13.7		%
Airframe			1,163						54.0		%				1,045						53.6		%				118						11.3		%
Non-aviation			35						41.2		%				28						38.4		%				7						25.0		%
Total segment EBITDA As Defined			2,587						53.6		%				2,295						55.2		%				292						12.7		%
Less: Unallocated corporate EBITDA As Defined			53						1.1		%	(1)			71						1.7		%	(1)			(18)						(25.4)		%
Total Company EBITDA As Defined			$	2,534					52.5		%	(1)			$	2,224					53.5		%	(1)			$	310					13.9		%

(1)Calculated as a percentage of consolidated net sales.

EBITDA As Defined for the Power & Control and Airframe segments increased approximately $167 million and $118 million, respectively, due to the increase in net sales described above, along with our application of our three core value-driven operating strategy.

Unallocated corporate EBITDA As Defined consists primarily of corporate expenses which includes compensation, benefits, professional services and other administrative costs incurred by our corporate offices. The decrease from prior year is attributable to the expiration of a deferred compensation program that was not renewed.

Liquidity and Capital Resources

We historically maintained a capital structure comprising a mix of equity and debt financing. We vary our leverage both to optimize our equity return and to pursue acquisitions. We expect to meet our current debt obligations as they come due through internally generated funds from current levels of operations and/or through refinancing in the debt markets prior to the maturity dates of our debt.

The following tables present selected balance sheet, cash flow and other financial data relevant to the liquidity or capital resources of the Company for the periods specified below (amounts in millions):

			March 28, 2026						September 30, 2025
Selected Balance Sheet Data:
Cash and cash equivalents			$	3,884					$	2,808
Working capital (Total current assets less total current liabilities)			6,139						4,830
Total assets			25,442						22,909
Total debt (1)			32,003						30,015
TD Group stockholders’ deficit			(9,402)						(9,686)

(1)Includes debt issuance costs and original issue discount. Reference Note 8, “Debt,” in the notes to the condensed consolidated financial statements included herein for additional information.

			Twenty-Six Week Periods Ended
			March 28, 2026						March 29, 2025
Selected Cash Flow and Other Financial Data:
Cash flows provided by (used in):
Operating activities			$	967					$	900
Investing activities			(1,137)						(191)
Financing activities			1,249						(4,540)
Capital expenditures			131						98
Ratio of earnings to fixed charges (1)			2.3x						2.6x

(1)For purposes of computing the ratio of earnings to fixed charges, earnings consist of income from continuing operations before income taxes plus fixed charges. Fixed charges consist of interest expense, amortization of debt issuance costs and original issue discount and the “interest component” of rental expense.

Significant Transactions of Fiscal 2026 and Subsequent Events

Acquisitions

• On October 6, 2025, the Company completed the acquisition of all the outstanding stock of Simmonds for approximately $757 million in cash. The acquisition was financed using cash on hand.

• On December 30, 2025, the Company entered into a definitive agreement to acquire all the outstanding stock of Stellant Systems, Inc. (“Stellant”) for approximately $960 million in cash. The acquisition is subject to regulatory approvals in the United States and customary closing conditions. The acquisition is expected to be financed using cash on hand as well as the net proceeds from the debt issuances completed in April 2026 (as further described below).

• On April 7, 2026, the Company completed the acquisition of Jet Parts Engineering (“JPE”) and Victor Sierra Aviation Holdings (“VSA”) for approximately $2.2 billion in cash. The definitive agreement to acquire JPE and VSA from Vance Street Capital was entered into on January 13, 2026. The acquisition was financed using cash on hand and the net proceeds from the debt offerings completed in February 2026 (as further described below).

• During the first half of fiscal 2026, the Company completed several acquisitions consisting of substantially all of the assets and technical data rights of certain product lines or all the outstanding stock of certain businesses (collectively, referred to herein as the “Other Acquisitions”), each meeting the definition of a business, for a total aggregate purchase price of $243 million in cash. Each of the acquisitions was financed using cash on hand.

Debt Financing

*•*On February 13, 2026, the Company completed $2,000 million in new debt issuances. The new debt was comprised of $1,200 million in aggregate principal amount of senior subordinated notes due 2034 at an issue price of 100% that bear interest at a rate of 6.125% (the “Initial 6.125% 2034 Notes”) and $800 million of Tranche N term loans (the “Initial Tranche N term loans”) that bear interest at a rate of Term SOFR plus 2.50%. Original issue discount of 0.25%, or $1 million, was paid to the lenders of the Initial Tranche N term loans. The net proceeds from the February 13, 2026 new debt issuances were used, along with cash on hand, to fund the purchase price of the acquisition of JPE and VSA and for related transaction fees and expenses.

• On April 17, 2026, the Company completed $1,500 million in new debt issuances. The new debt was comprised of $500 million in aggregate principal amount of additional senior subordinated notes due 2034 at an issue price of 100.375%, or a premium of approximately $2 million, that bear interest at a rate of 6.125% (the “New 6.125% 2034 Notes”) and $1,000 million in new Tranche N term loans (the “New Tranche N term loans”) that bear interest at a rate of Term SOFR plus 2.50%. Original issue discount of 0.25%, or approximately $1 million, was paid to the lenders of the New Tranche N term loans. The net proceeds from the April 17, 2026 new debt issuances are intended to be used, along with cash on hand, to fund the purchase price of the expected acquisition of Stellant and for general corporate purposes, including replenishment on our balance sheet of a portion of the cash used to fund the common stock repurchases (as further described below) and for related transaction fees and expenses.

Common Stock Repurchases

• For the twenty-six week period ended March 28, 2026, the Company repurchased, in aggregate, 687,282 shares of common stock at an average price of $1,206.68 per share for a total amount of $829 million, of which $108 million is accrued within accrued and other current liabilities as of March 28, 2026. The repurchased shares of common stock are classified as treasury stock in the statement of changes in stockholders' deficit.

• In April 2026, the Company repurchased 66,537 shares of common stock at an average price of $1,138.88 per share for a total amount of $76 million. Whether the Company undertakes additional stock repurchases or other aforementioned activities will depend on prevailing market conditions, the Company's liquidity requirements, contractual restrictions and other factors.

---

If the Company has excess cash, it generally prioritizes allocating the excess cash in the following manner: (1) capital spending at existing businesses, (2) acquisitions of businesses, (3) payment of a special dividend and/or repurchases of our common stock and (4) prepayment of indebtedness or repurchase of debt.

The Company’s ability to make scheduled interest payments on, or to refinance, the Company’s indebtedness, or to fund non-acquisition related capital expenditures and research and development efforts, will depend on the Company’s ability to generate cash in the future. This is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond its control.

The Company's objective is to maintain an allocation of at least 75% fixed rate and 25% variable rate debt thereby limiting its exposure to changes in near-term interest rates. Interest rate swaps, caps and collars used to hedge and offset, respectively, the variable interest rates on our term loans are further described in Note 11, “Derivatives and Hedging Activities,” in the notes to the condensed consolidated financial statements included herein. As of March 28, 2026, approximately 75% of our gross debt was fixed rate.

As of March 28, 2026, the Company has significant cash liquidity as illustrated in the table presented below (in millions):

			As of March 28, 2026
Cash and cash equivalents			$	3,884
Availability on revolving credit facility			861
Cash liquidity			$	4,745

We believe our significant cash liquidity will allow us to meet our anticipated funding requirements. We expect to meet our short-term cash liquidity requirements (including interest obligations and capital expenditures) through net cash from operating activities, cash on hand and, if needed, draws on the revolving credit facility. Long-term cash liquidity requirements consist primarily of obligations under our long-term debt agreements. There is no maturity on any tranche of term loans or notes until August 2028 (fiscal 2028).

In connection with the continued application of our three core value-driven operating strategy, we expect our efforts will continue to generate strong margins and provide sufficient cash provided by operating activities to meet our interest obligations and liquidity needs. We believe our cash provided by operating activities and available borrowing capacity will enable us to make strategic business acquisitions, pay dividends to our shareholders and make opportunistic investments in our own stock, subject to any restrictions in our existing Second Amended and Restated Credit Agreement dated as of June 4, 2014 (the “Credit Agreement”) and market conditions.

The Company may issue additional debt if prevailing market conditions are favorable to doing so. In addition, the Company may increase its borrowings in connection with acquisitions, if cash flow from operating activities becomes insufficient to fund current operations or for other short-term cash needs or for common stock repurchases or dividends. Our future leverage will also be impacted by the then current conditions of the credit markets.

Operating Activities. The Company generated $967 million of net cash from operating activities during the twenty-six week period ended March 28, 2026 compared to $900 million during the twenty-six week period ended March 29, 2025.

The change in accounts receivable during the twenty-six week period ended March 28, 2026 was a use of cash of $65 million compared to a use of cash of $66 million during the twenty-six week period ended March 29, 2025. The change is primarily attributable to the timing of cash receipts. The Company actively manages its accounts receivable, the related agings and collection efforts.

The change in inventories during the twenty-six week period ended March 28, 2026 was a use of cash of $145 million compared to a use of cash of $116 million during the twenty-six week period ended March 29, 2025. The increase is due to an increase in raw materials to support the fiscal 2026 sales demand. The Company manages inventory levels in support of customer needs.

The change in accounts payable during the twenty-six week period ended March 28, 2026 was a source of cash of $15 million compared to a use of cash of $2 million during the twenty-six week period ended March 29, 2025. The change is due to the timing of payments to suppliers.

Investing Activities. Net cash used in investing activities was $1,137 million during the twenty-six week period ended March 28, 2026, consisting primarily of the acquisition of Simmonds and other acquisitions of businesses completed during the first half of fiscal 2026 aggregating to $1,000 million, capital expenditures of $131 million and other investing transactions outflows of $6 million.

Net cash used in investing activities was $191 million during the twenty-six week period ended March 29, 2025, consisting primarily of other acquisitions of businesses completed during the first half of fiscal 2025 aggregating to $140 million and capital expenditures of $98 million; partially offset by other investing transactions inflows of $47 million.

Financing Activities. Net cash provided by financing activities was $1,249 million during the twenty-six week period ended March 28, 2026. The source of cash was primarily attributable to the net proceeds from the February 2026 new debt issuances, including fees, of $1,980 million plus proceeds from stock option exercises of $83 million; partially offset by repurchases of common stock of $721 million, dividend equivalent payments of $59 million, and repayments on term loans plus other financing costs aggregating to $34 million.

Net cash used in financing activities was $4,540 million during the twenty-six week period ended March 29, 2025. The use of cash was primarily attributable to dividend and dividend equivalent payments of $4,396 million, repurchases of common stock of $369 million and repayments on term loans plus other financing costs aggregating to $27 million; partially offset by an additional draw from the trade receivable securitization facility, including fees, of $163 million and proceeds from stock option exercises of $89 million.

Description of Senior Secured Term Loans and Indentures

Senior Secured Term Loans Facilities

TransDigm has $11,896 million in fully drawn term loans (the “Term Loans Facility”) as of March 28, 2026 and a $910 million revolving credit facility. The Term Loans Facility consists of five tranches of term loans with maturity dates ranging from March 22, 2030 to February 13, 2033, and requires quarterly aggregate principal payments of $30 million. Subsequent to the quarter ended March 28, 2026, the Company issued an additional $1,000 million in Tranche N term loans, increasing the quarterly aggregate principal payments to $32 million. Refer to Note 8, “Debt,” in the notes to the condensed consolidated financial statements included herein for further disclosure.

The revolving commitments consist of two tranches which include up to $139 million of multicurrency revolving commitments. At March 28, 2026, the Company had $49 million in letters of credit outstanding and $861 million in borrowings available under the revolving commitments. Draws on the revolving commitments are subject to an interest rate of 2.25%. The unused portion of the revolving commitments is subject to a fee of 0.50% per annum. The maturity date of the revolving credit facility is February 27, 2029.

The interest rates per annum applicable to the Term Loans Facility under the Credit Agreement are, at TransDigm’s option, equal to either an alternate base rate or an adjusted Term SOFR for one, three or six-month interest periods chosen by TransDigm, in each case plus an applicable margin percentage. The adjusted Term SOFR related to the Term Loans Facility are not subject to a floor. Refer to Note 11, “Derivatives and Hedging Activities,” in the notes to the condensed consolidated financial statements included herein for information about how our interest rate swaps, caps and collar agreements are used to hedge and offset, respectively, the variable interest rate portion of our debt.

Indentures

The following table represents the senior subordinated and secured notes outstanding as of March 28, 2026:

Description						Aggregate Principal						Maturity Date						Interest Rate
2028 Secured Notes (2)						$2,100 million						August 15, 2028						6.750%
4.625% 2029 Notes (1)						$1,200 million						January 15, 2029						4.625%
2029 Secured Notes (2)						$2,750 million						March 1, 2029						6.375%
4.875% 2029 Notes (1)						$750 million						May 1, 2029						4.875%
2030 Secured Notes (2)						$1,450 million						December 15, 2030						6.875%
2031 Secured Notes (2)						$1,000 million						December 1, 2031						7.125%
2032 Secured Notes (2)						$2,200 million						March 1, 2032						6.625%
2033 Secured Notes (2)						$1,500 million						January 15, 2033						6.000%
6.375% 2033 Notes (1)						$2,650 million						May 31, 2033						6.375%
2034 Secured Notes (2)						$500 million						January 31, 2034						6.250%
6.750% 2034 Notes (1)						$2,000 million						January 31, 2034						6.750%
Initial 6.125% 2034 Notes (1)(3)						$1,200 million						July 31, 2034						6.125%

(1)Collectively, referred to as the “Subordinated Notes” herein.

(2)Collectively, referred to as the “Secured Notes” herein.

(3)Subsequent to the quarter ended March 28, 2026, the Company issued an additional $500 million of 6.125% 2034 Notes. Refer to Note 8, “Debt,” in the notes to the condensed consolidated financial statements included herein for further disclosure.

The Subordinated Notes and Secured Notes do not require principal payments prior to their maturity. Interest under the Subordinated Notes and Secured Notes is payable semi-annually. The Subordinated Notes represent our unsecured obligations ranking subordinate to our senior debt, as defined in the applicable indentures. The Secured Notes represent our secured obligations ranking equally to all existing and future senior debt, as defined in the applicable indentures. The Subordinated Notes and Secured Notes contain many of the restrictive covenants included in the Credit Agreement. TransDigm is in compliance with all of the covenants contained in the Subordinated Notes and Secured Notes.

Guarantor Information

The Subordinated Notes are subordinated to all of our existing and future senior secured debt, including indebtedness under TransDigm’s existing senior secured credit facilities, rank equally with all of our existing and future senior subordinated debt and rank senior to all of our future debt that is expressly subordinated to the Subordinated Notes. The 4.625% 2029 Notes and the 4.875% 2029 Notes are fully and unconditionally guaranteed on a senior subordinated unsecured basis by TransDigm Group, TransDigm UK and TransDigm Inc.’s Domestic Restricted Subsidiaries (as defined in the applicable indentures). The 6.375% 2033 Notes, 6.750% 2034 Notes and the Initial 6.125% 2034 Notes are guaranteed, on a senior subordinated basis, by TransDigm Group and each of TransDigm Inc.’s direct and indirect restricted subsidiaries that is a borrower or guarantor under TransDigm’s senior secured credit facilities or that issues or guarantees any capital markets indebtedness of TransDigm or any of the guarantors in an aggregate principal amount of at least $200 million. The table set forth in Exhibit 22.1 filed with this Form 10-Q details the primary obligors and guarantors. The guarantees of the Subordinated Notes are subordinated to all of the guarantors’ existing and future senior debt, rank equally with all of their existing and future senior subordinated debt and rank senior to all of their future debt that is expressly subordinated to the guarantees of the Subordinated Notes. The Subordinated Notes are structurally subordinated to all of the liabilities of TransDigm Group’s non-guarantor subsidiaries.

The Secured Notes are senior secured debt of TransDigm and rank equally in right of payment with all of TransDigm’s existing and future senior secured debt, including indebtedness under TransDigm’s existing senior secured credit facilities, and are senior in right of payment to all of TransDigm’s existing and future senior subordinated debt, including the Subordinated Notes. The 2028 Secured Notes are guaranteed on a senior secured basis by TransDigm Group, TransDigm UK and TransDigm Inc.’s Domestic Restricted Subsidiaries (as defined in the applicable indentures). The 2029 Secured Notes, 2030 Secured Notes, 2031 Secured Notes, 2032 Secured Notes, 2033 Secured Notes and 2034 Secured Notes are guaranteed on a senior secured basis by TransDigm Group and each of TransDigm Inc.’s direct and indirect Restricted Subsidiaries (as defined in the applicable indenture) that is a borrower or guarantor under TransDigm’s senior secured credit facilities or that issues or guarantees any capital markets indebtedness of TransDigm Inc. or any of the guarantors in an aggregate principal amount of at least $200 million. As of the date of this Form 10-Q, the guarantors of the 2029 Secured Notes, 2030 Secured Notes, 2031 Secured Notes, 2032 Secured Notes, 2033 Secured Notes and 2034 Secured Notes are the same as the guarantors of the 2028 Secured Notes. The table set forth in Exhibit 22.1 filed with this Form 10-Q details the primary obligors and guarantors. The guarantees of the Secured Notes rank equally in right of payment with all of the guarantors’ existing and future senior secured debt and are senior in right of payment to all of their existing and future senior subordinated debt. The Secured Notes are structurally subordinated to all of the liabilities of TransDigm’s non-guarantor subsidiaries.

Separate financial statements of TransDigm Inc. are not presented because the Subordinated Notes and Secured Notes are fully and unconditionally guaranteed on a senior subordinated unsecured basis (if Subordinated Notes) and senior secured basis (if Secured Notes) by TransDigm Group, TransDigm UK and all of TransDigm Inc.'s Domestic Restricted Subsidiaries. TransDigm Group has no significant operations or assets separate from its investment in TransDigm Inc.

The financial information presented is that of TransDigm Group, TransDigm Inc. and the other Guarantors, which includes TransDigm UK, on a combined basis and the financial information of non-issuer and non-guarantor subsidiaries has been excluded. Intercompany balances and transactions between TransDigm Group, TransDigm Inc. and the other Guarantors have been eliminated, and amounts due from, amounts due to, and transactions with non-issuer and non-guarantor subsidiaries have been presented separately.

(in millions)			As of March 28, 2026
Current assets			$	5,845
Goodwill			8,786
Other non-current assets			4,538
Current liabilities			1,291
Non-current liabilities			32,007
Amounts due (from) to subsidiaries that are non-issuers and non-guarantors-net			(2,360)

			Twenty-Six Week Period Ended
(in millions)			March 28, 2026
Net sales			$	3,854
Sales to subsidiaries that are non-issuers and non-guarantors			16
Cost of sales			1,546
Expense from subsidiaries that are non-issuers and non-guarantors-net			31
Income from operations			649
Net income attributable to TD Group			649

Certain Restrictive Covenants in Our Debt Documents

The Credit Agreement and the indentures governing the Subordinated Notes and Secured Notes contain restrictive covenants that, among other things, limit the incurrence of additional indebtedness, the payment of special dividends, transactions with affiliates, asset sales, acquisitions, mergers and consolidations, liens and encumbrances, and prepayments of certain other indebtedness.

The restrictive covenants included in the Credit Agreement are subject to amendments executed periodically. The most recent amendment that impacted the restrictive covenants contained in the Credit Agreement is Amendment No. 15, executed on March 22, 2024.

Under the terms of the Credit Agreement, TransDigm is entitled, on one or more occasions, to request additional term loans or additional revolving commitments to the extent that the existing or new lenders agree to provide such incremental term loans or additional revolving commitments provided that, among other conditions, our consolidated net leverage ratio would be no greater than 7.25x and the consolidated secured net debt ratio would be no greater than 5.00x, in each case, after giving effect to such incremental term loans or additional revolving commitments.

If any such default occurs, the lenders under the Credit Agreement and the holders of the Subordinated Notes and Secured Notes may elect to declare all outstanding borrowings, together with accrued interest and other amounts payable thereunder, to be immediately due and payable. The lenders under the Credit Agreement also have the right in these circumstances to terminate any commitments they have to provide further borrowings. In addition, following an event of default under the Credit Agreement, the lenders thereunder and the holders of the Secured Notes will have the right to proceed against the collateral granted to them to secure the debt, which includes our available cash, and they will also have the right to prevent us from making debt service payments on the Notes.

With the exception of the revolving credit facility, the Company has no maintenance covenants in its existing term loan and indenture agreements. Under the Credit Agreement, if the usage of the revolving credit facility exceeds 40% (or, currently, $364 million) of the total revolving commitments, the Company is required to maintain a maximum consolidated net leverage ratio of net debt to trailing four-quarter EBITDA As Defined of 7.50x (or, solely with respect to the first four fiscal quarters ending after the consummation of any material acquisition, 8.00x) as of the last day of the fiscal quarter.

As of March 28, 2026, the Company was in compliance with all of its debt covenants and expects to remain in compliance with its debt covenants in subsequent periods.

Trade Receivable Securitization Facility

During fiscal 2014, the Company established a trade receivable securitization facility (the “Securitization Facility”). The Company’s Securitization Facility effectively increases the Company’s borrowing capacity depending on the amount of the domestic operations’ trade accounts receivable. The Securitization Facility includes the right for the Company to exercise annual one year extensions as long as there have been no termination events as defined by the agreement. The Company uses the proceeds from the Securitization Facility as an alternative to other forms of debt, effectively reducing borrowing costs.

On July 11, 2025, the Company amended the Securitization Facility to, among other things, (i) increase the borrowing capacity from $650 million to $725 million; and (ii) extend the maturity date to July 10, 2026 at an interest rate of Term SOFR plus 1.35% compared to an interest rate of Term SOFR plus 1.45% that applied prior to the amendment.

As of March 28, 2026, the Securitization Facility was fully drawn and the applicable interest rate was 5.03%. The Securitization Facility is collateralized by substantially all of the Company’s domestic operations’ trade accounts receivable.

Contractual Obligations

We have future obligations under various contracts relating to debt and interest payments, finance and operating leases, pension and post-retirement benefit plans and purchase obligations. During the twenty-six week period ended March 28, 2026, other than the debt financing activities disclosed in Note 8, “Debt,” in the notes to the condensed consolidated financial statements included herein, there were no material changes to these obligations as reported in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025.

Dividend and Dividend Equivalent Payments

Pursuant to the Fourth Amended and Restated TransDigm Group Incorporated 2006 Stock Incentive Plan Dividend Equivalent Plan, the Amended and Restated 2014 Stock Option Plan Dividend Equivalent Plan and the 2019 Stock Option Plan Dividend Equivalent Plan, all of the vested options granted under the existing stock option plans, except for grants to the members of the Board of Directors, are entitled to certain dividend equivalent payments in the event of the declaration of a dividend by the Company.

No dividends were declared in the twenty-six week period ended March 28, 2026. Dividend equivalent payments are made during the Company's first fiscal quarter each year and also upon payment of any dividends declared. Total dividend equivalent payments in the first quarter of fiscal 2026 were approximately $59 million.

Off-Balance Sheet Arrangements

The Company utilizes letters of credit to back certain payment and performance obligations. Letters of credit are subject to limits based on amounts outstanding under the Company’s revolving credit facility. As of March 28, 2026, the Company had $49 million in letters of credit outstanding.

Non-GAAP Financial Measures

We present below certain financial information based on our EBITDA and EBITDA As Defined. References to “EBITDA” mean earnings before interest, taxes, depreciation and amortization, and references to “EBITDA As Defined” mean EBITDA plus, as applicable for each relevant period, certain adjustments as set forth in the reconciliations of net income to EBITDA and EBITDA As Defined and the reconciliations of net cash provided by operating activities to EBITDA and EBITDA As Defined presented below.

Neither EBITDA nor EBITDA As Defined is a measurement of financial performance under U.S. GAAP. We present EBITDA and EBITDA As Defined because we believe they are useful indicators for evaluating operating performance and liquidity.

Our management believes that EBITDA and EBITDA As Defined are useful as indicators of liquidity because securities analysts, investors, rating agencies and others use EBITDA to evaluate a company’s ability to incur and service debt. In addition, EBITDA As Defined is useful to investors because the revolving credit facility under our senior secured credit facility requires compliance under certain circumstances, on a pro forma basis, with a financial covenant that measures the ratio of the amount of our secured indebtedness to the amount of our Consolidated EBITDA defined in the same manner as we define EBITDA As Defined herein.

In addition to the above, our management uses EBITDA As Defined to review and assess the performance of the management team in connection with employee incentive programs and to prepare its annual budget and financial projections. Moreover, our management uses EBITDA As Defined to evaluate acquisitions.

Although we use EBITDA and EBITDA As Defined as measures to assess the performance of our business and for the other purposes set forth above, the use of these non-GAAP financial measures as analytical tools has limitations, and you should not consider any of them in isolation, or as a substitute for analysis of our results of operations as reported in accordance with U.S. GAAP. Some of these limitations are:

• neither EBITDA nor EBITDA As Defined reflects the significant interest expense, or the cash requirements, necessary to service interest payments on our indebtedness;

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and neither EBITDA nor EBITDA As Defined reflects any cash requirements for such replacements;

• the omission of the substantial amortization expense associated with our intangible assets further limits the usefulness of EBITDA and EBITDA As Defined;

• neither EBITDA nor EBITDA As Defined includes the payment of taxes, which is a necessary element of our operations; and

• EBITDA As Defined excludes the cash expense we have incurred to integrate acquired businesses into our operations, which is a necessary element of certain of our acquisitions.

Because of these limitations, EBITDA and EBITDA As Defined should not be considered as measures of discretionary cash available to us to invest in the growth of our business. Management compensates for these limitations by not viewing EBITDA or EBITDA As Defined in isolation and specifically by using other U.S. GAAP measures, such as net income, net sales and operating profit, to measure our operating performance. Neither EBITDA nor EBITDA As Defined is a measurement of financial performance under U.S. GAAP, and neither should be considered as an alternative to net income or cash flow from operations determined in accordance with U.S. GAAP. Our calculation of EBITDA and EBITDA As Defined may not be comparable to the calculation of similarly titled measures reported by other companies.

The following table sets forth a reconciliation of net income to EBITDA and EBITDA As Defined (in millions):

			Thirteen Week Periods Ended												Twenty-Six Week Periods Ended
			March 28, 2026						March 29, 2025						March 28, 2026						March 29, 2025
Net Income			$	536					$	479					$	981					$	972
Adjustments:
Depreciation and amortization expense			105						89						205						179
Interest expense-net			484						378						959						756
Income tax provision			164						143						291						269
EBITDA			1,289						1,089						2,436						2,176
Adjustments:
Acquisition transaction and integration-related expenses (1)			19						9						31						22
Non-cash stock and deferred compensation expense (2)			26						48						53						73
Other, net (3)			3						16						14						(47)
EBITDA As Defined			$	1,337					$	1,162					$	2,534					$	2,224

(1)						Represents costs incurred to integrate acquired businesses into our operations; facility relocation costs and other acquisition-related costs; transaction and valuation-related costs for acquisitions comprising deal fees, legal, financial and tax due diligence expenses; and amortization expense of inventory step-up recorded in connection with the purchase accounting of acquired businesses.
(2)						Represents the compensation expense recognized under our stock option plans and deferred compensation plans.
(3)						Primarily represents foreign currency transaction gains or losses, payroll withholding taxes related to dividend equivalent payments and stock option exercises, non-service related pension costs, deferred compensation payments and other miscellaneous income or expense, such as gain on sale of business.

The following table sets forth a reconciliation of net cash provided by operating activities to EBITDA and EBITDA As Defined (in millions):

			Twenty-Six Week Periods Ended
			March 28, 2026						March 29, 2025
Net cash provided by operating activities			$	967					$	900
Adjustments:
Changes in assets and liabilities, net of effects from acquisitions and sales of businesses			294						322
Interest expense-net (1)			936						737
Income tax provision-current			292						271
Gain on sale of businesses, net			—						19
Non-cash stock and deferred compensation expense (2)			(53)						(73)
EBITDA			2,436						2,176
Adjustments:
Acquisition transaction and integration-related expenses (3)			31						22
Non-cash stock and deferred compensation expense (2)			53						73
Other, net (4)			14						(47)
EBITDA As Defined			$	2,534					$	2,224

(1)						Represents interest expense, net of interest income, excluding the amortization of debt issuance costs and discount on debt.
(2)						Represents the compensation expense recognized under our stock option plans and deferred compensation plans.
(3)						Represents costs incurred to integrate acquired businesses into our operations; facility relocation costs and other acquisition-related costs; transaction and valuation-related costs for acquisitions comprising deal fees, legal, financial and tax due diligence expenses; and amortization expense of inventory step-up recorded in connection with the purchase accounting of acquired businesses.
(4)						Primarily represents foreign currency transaction gains or losses, payroll withholding taxes related to dividend equivalent payments and stock option exercises, non-service related pension costs, deferred compensation payments and other miscellaneous income or expense, such as gain on sale of business.