President and Chief Executive Officer at TransDigm Group
Good morning. Thanks for calling in today. First, I'll start-off with the usual quick overview of our strategy. A few comments about the quarter and discuss our fiscal '23 outlook, then George and Mike will give additional color on the quarter. To reiterate, we are unique in the industry in both the consistency of our strategy in good times and bad, as well as our steady focus on intrinsic shareholder value-creation through all phases of the aerospace cycle.
To summarize, here are some of the reasons why we believe this. About 90% of our net sales are generated by unique proprietary products. Most of our EBITDA comes from aftermarket revenues, which generally have significantly higher margins and over any extended period have typically provided relative stability in the downturns. We follow a consistent long-term strategy, specifically, we own and operate proprietary aerospace businesses with significant aftermarket content. We utilize a simple well-proven, value-based operating methodology. We have a decentralized organizational structure and unique compensation system, closely aligned with shareholders.
We acquire businesses that fit this strategy and where we see a clear path to PE-like returns. And lastly, our capital structure and allocations are a key part of our value creation methodology. Our long-standing goal is to give our shareholders private equity like returns with the liquidity of a public market. To do this, we stay focused on both the details of value creation as well as careful allocation of our capital. As you saw from our earnings release, we had a good start to fiscal '23 and increased our guidance for the year.
We continue to see recovery in the commercial aerospace market. Our Q1 results show positive growth in comparison to the same prior year period. We are encouraged by the progression of the commercial aerospace market recovery to date. And trends in the commercial aerospace market remain favorable as demand for travel remains robust.
International air traffic is closing in on the domestic travel recovery and China reopened its air travel in January with the lifting of its pandemic restrictions. However, there is still progress be made for the industry as our results to continue to be adversely affected in comparison to pre-pandemic levels since the demand for air travel is still depressed.
In our business, we saw another quarter of very healthy growth in our total commercial revenues and bookings. Bookings also outpaced revenues in all three of our major market channels, commercial OEM, commercial aftermarket, and defense. We also attained an EBITDA as defined margin of 50% in the quarter, contributing to this strong margin is the continued recovery in our commercial aftermarket revenues along with a diligent focus on our operating strategy.
Additionally, we had strong operating cash flow generation in Q1 of almost $380 million and ended the quarter with close to $3.3 billion of cash. We expect to steadily generate significant additional cash throughout the remainder of 2023.
Next, an update on our capital allocation activities and priorities. The capital allocation priorities at TransDigm are unchanged. Our first priority is to reinvest in our businesses. Second, to do accretive M&A, and third return capital to our shareholders via share buybacks or dividends. A fourth option, paying down debt seems unlikely at this time though, we do still take this into consideration.
We are continually evaluating all of our capital allocation options. As mentioned earlier, earlier, we ended the quarter with a sizable cash balance of close to $3.3 billion which leaves us with significant liquidity and financial flexibility to meet any likely range of capital requirements or other opportunities in the readily foreseeable future. Regarding the current M&A pipeline. We are actively looking for M&A opportunities that fit our model, acquisition opportunity activity continues and we have a decent pipeline of possibilities as usual, mostly in the small and mid-size range. I cannot predict or comment on possible closings but we remain confident that there is a long runway for acquisitions that fit our portfolio. Both the M&A and capital markets are always difficult to predict, but especially so in these times.
Now moving to our outlook for fiscal 2023, as noted in our earnings release, we are increasing our full fiscal year '23, sales and EBITDA as defined guidance both by $65 million to reflect our strong first quarter results and current expectations for the remainder of the year. The guidance assumes the continued recovery in our primary commercial end markets through fiscal '23 and no additional acquisitions or divestitures.
Our current year guidance is as follows and it can also be found on Slide 6 in the presentation. The midpoint of our revenue guidance is now $6.155 billion or up approximately 13%. In regards to the market channel growth rate assumptions that this revenue guidance is based on, for the commercial aftermarket, we are updating the full year growth rate assumptions as a result of our strong first quarter results and current expectations for the remainder of the year. We now expect commercial aftermarket revenue growth in the in the high teens percentage range, which is an increase from our previous guidance of mid-teens percentage range.
At this time, we are not updating the full year market channel growth rate assumptions for commercial OEM and defense as underlying market fundamentals have not meaningfully changed. Commercial OEM and defense revenue guidance is still based on our previously issued market channel growth rate assumptions, where we expect commercial OEM revenue growth in the mid-teens percentage range and defense revenue growth in the low to mid single digit percentage range.
The midpoint of our EBITDA as defined guidance is now $3.11 billion, or up approximately 18% with an expected margin of around 50.5%. This guidance includes about 50 basis-points of margin dilution from our recent DART Aerospace acquisition. We anticipate EBITDA margins will continue to move up throughout the remainder of the year. The midpoint of our adjusted EPS is increasing primarily due to the higher EBITDA as defined guidance and is now anticipated to be $22.17 or up approximately 29%, Mike will discuss in more detail shortly some other fiscal '23 financial assumptions and updates.
As our fiscal '23 progresses should the favorable trends in the commercial aerospace market recovery continue including the expansion of flight activity in China, we could see further upward revisions to our guidance.
We believe we are well-positioned for the remainder of fiscal 2023, we'll continue to closely watch how the aerospace and capital markets continue to develop and react accordingly. On the organization side I wanted to announce the retirement of Halle Martin, our General Counsel, Chief Compliance Officer and Secretary. Halle has been an integral part of our team since 2012 and long before as outside counsel. Jes Warren has been promoted from her position as Associate General Counsel to fill this critical role as part of our robust succession planning process. Thank you, Halle, for all of your great counsel and dedication to TransDigm.
Let me conclude by stating that I'm very pleased with the company's performance this quarter and throughout the recovery of the commercial aerospace industry. We remain focused on our value drivers, cost structure and operational excellence.
Let me hand it over to Jorge, to review our current, our recent performance and a few other items.