Q3 2026 results
| Metric | Result | Change |
|---|---|---|
| Revenue | $4.6 billion | up 2.4% organically |
| Adjusted EBIT | $1.2 billion | up 4% against pro forma stand-alone |
| Adjusted EPS | $2.21 | Not stated |
| Free Cash Flow | $0.5 billion | Not stated |
| Backlog | more than $19 billion | up 12% |
Guidance and outlook
- Full-year 2026 organic sales growth: 4% to 5%
- Full-year 2026 pro forma stand-alone adjusted EPS: $7.85 to $8
- Second half 2026 free cash flow: $1.2 billion to $1.4 billion
- Full-year 2026 capital expenditures: about $650 million
How management sounded
Positive (+5 on our -10 to +10 scale). Management raised full-year EPS guidance and declared a first dividend, reflecting confidence in long-term demand despite ongoing supply chain constraints. Management sounded more upbeat than on 6% of the 190 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Q&A summary
Supply Chain Visibility
Asked: How much visibility do you have into supplier KPIs?
Answer: Management noted improved transparency and narrowing output gaps, with output expected to build quarter-over-quarter through 2027.
OEM vs. Aftermarket
Asked: Are OEM build rates at risk due to supply issues?
Answer: Management is prioritizing OEM fulfillment to ensure production lines are not impacted, with aftermarket allocation increasing as supply improves.
Defense International
Asked: Is prioritizing domestic defense hurting international orders?
Answer: While domestic defense is prioritized, international defense demand remains strong with double-digit order growth.
Commercial Aftermarket
Asked: What is the outlook for commercial aftermarket?
Answer: Demand remains robust with 12% order growth, and business aviation flight hours are resilient, particularly in the super midsized category.
What to watch before the next call
- Progress of the 70 critical suppliers on the watch list, specifically in mechanical categories like bearings and complex machining.
- The ramp-up of output growth in 2027 as new supply chain investments and multi-sourcing initiatives take effect.
- Management of mix headwinds as OE and domestic defense demand continues to outpace aftermarket and international sales.
