You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. 
Text: Please visit our website at transdigm.com to obtain a supplemental slide deck and call replay information.
The company would also like to advise you that during the course of the call, we will be referring to EBITDA, specifically EBITDA as defined, adjusted net income and adjusted earnings per share, all of which are non-GAAP financial measures.
First, I'll start off with a quick overview of our strategy, a summary of a few significant items in the quarter, and discuss our fiscal 2022 outlook.
Then Jorge and Mike will give additional color on the quarter.
Jorge Valladares is joining our earnings call today and will do so going forward.
Jorge is currently our chief operating officer and has been in the role since 2019.
Over the last 20-plus years with TransDigm, Jorge has had an unusually broad operating background and has been a key culture carrier.
He most recently served as our COO of Power and Control, where all of the Power Group businesses reported to Jorge.
Prior to this role, he served four years as an executive vice president and was president at two of our larger operating units, AvtechTyee and AdelWiggins.
Jorge initially started at AdelWiggins Group and held various positions of increasing responsibility in engineering, manufacturing and sales as he worked his way up.
We're excited to have him join the earnings call and offer his expertise.
Now moving on to the business of today.
To reiterate, we are unique in the industry in both the consistency of our strategy in good and bad times as well as our steady focus on intrinsic shareholder value creation through all phases of the aerospace cycle.
This should sound similar to what you have always heard from TransDigm.
To summarize, here are some of the reasons why we believe this.
About 90% of our net sales are generated by proprietary products, and over three quarters of our net sales come from products for which we believe we are the sole source provider.
Most of our EBITDA comes from aftermarket revenues, which generally have significant 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 organization structure and unique compensation system closely aligned with shareholders.
We acquire businesses that fit this strategy and where we see a clear path to private equity-like returns.
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.
We continue to see recovery in the commercial aerospace market and are encouraged by the trends in air traffic among other factors.
Our current Q4 results continue to show positive growth in comparison as we are lapping another fiscal 2020 quarter fully impacted by the pandemic.
However, our results continue to be unfavorably affected in comparison to pre-pandemic levels due to the reduced demand for air travel.
On a more encouraging note, the commercial aerospace industry has continued to show signs of recovery with increasing air traffic and vaccination rates expanding.
The recovery has remained primarily driven by domestic leisure travel, though we are optimistic for the recovery of international travel as more governments across the world soften travel restrictions.
In our business, we saw another quarter of sequential improvement in commercial aftermarket revenues with total commercial aftermarket revenues up 14% over Q3.
I am also very pleased that even in this challenging commercial environment, we continue to sequentially expand our EBITDA as defined margin.
Contributing to this increase is the continued recovery in our commercial aftermarket revenues as well as the careful management of our cost structure and focus on our operating strategy.
Additionally, we continued to generate significant cash in Q4.
We had strong operating cash flow generation of almost 300 million and closed the quarter with approximately 4.8 billion of cash.
We expect to steadily generate significant additional cash through 2022.
We continue to look at possible M&A opportunities and are always attentive to our capital allocation.
Both the M&A and capital markets are always difficult to predict, but especially so in these times.
First, I'd like to address the Meggitt situation that occurred this quarter.
We have long admired and studied the Meggitt business and believe that a combination between us and Meggitt could provide value to investors of both companies.
However, based on the quite limited due diligence information that was made available and the resulting uncertainties, we could not conclude that moving forward with an offer of 900 pence per Meggitt share would meet our long-standing goals for value creation and investor returns.
We've put substantial time and effort into evaluating this potential transaction, as we had communicated previously.
However, as we have said many times before, we are very disciplined with our capital allocation.
And when we make acquisitions, we need a reasonable degree of certainty for achieving our investment return goals, especially for a deal of this magnitude.
The diligence made available to us was too limited to provide the assurance needed to move forward, and our additional diligence requests were not met.
These additional diligence requests were very similar to what was typically received in the almost 90 acquisitions we have done over the life of the company.
It was a disappointment that we could not move forward, but it was the most prudent decision for the company and all of our stakeholders.
In regard to the current M&A pipeline, we are still actively looking for M&A opportunities that fit our model.
Acquisition opportunities in the last quarter was still slower than pre-COVID, but we are starting to see some pickup in activity.
We remain confident that there is a long runway for acquisitions that fit our portfolio, primarily in the small to midsize opportunities, and look forward to continued M&A activity far into the future.
At this time, we don't anticipate that we make any significant dividends or share buybacks for at least the next quarter, but we will keep watching and see if our views change.
Now moving to our outlook for 2022.
While we are not providing full financial guidance at this time as a result of the continued disruption in our primary commercial end markets, we are providing guidance on select financial metrics for fiscal 2022, including EBITDA as defined margins, expected defense market revenue, growth, tax rates, and other key financial assumptions.
We do continue to be encouraged by the recovery we have seen in both our commercial OEM and aftermarket revenues and bookings in fiscal 2021, but many unknowns remain for the pace and shape of the recovery.
We will look to reinstitute guidance when we have a clearer picture of the future.
Currently, we expect COVID-19 to continue to have an adverse impact on our financial results compared to pre-pandemic levels into fiscal 2022 under the assumption that both our commercial OEM and aftermarket customer demand will remain depressed due to lower worldwide air travel, although recent positive trends in commercial air traffic could impact us favorably.
Given what we know today, our teams are planning for our commercial aftermarket revenue to grow in the 20 to 30% range, planning for our commercial aftermarket revenue to grow in the 20 to 30% range.
We expect our commercial OEM revenue to grow significantly as well, but at a rate slightly less than the commercial aftermarket.
As you know, we aim to be conservative and would be happy to have both of these end markets rebound more strongly.
Jorge will provide further detail on a few key points of consideration that will drive our ultimate commercial growth.
As for the defense market, we expect defense revenue growth in the low single-digit percent range versus fiscal 2022.
Now a bit more color on EBITDA as defined expectations for fiscal 2022.
We expect full year fiscal 2022 EBITDA margins to be roughly in the area of 47%, which could be higher or lower based on the rate of commercial aftermarket recovery.
This guidance assumes a steady increase in commercial aftermarket revenue throughout fiscal 2022, with Q1 being the lowest.
In similar fashion, we anticipate that EBITDA margins will move up throughout fiscal 2022, with Q1 being the lowest and sequentially lower than Q4.
As a final note, this margin guidance includes the unfavorable headwind of our recent Cobham acquisition of about 0.5%.
As a reminder, and consistent with past years, with roughly 10% less working days than the subsequent quarters, fiscal year 2022 Q1 revenues, EBITDA, EBITDA margins are anticipated to be lower than the other three quarters of fiscal year 2022.
We believe we are well positioned as we enter fiscal '22.
As usual, we'll closely watch the aerospace and capital markets development and react accordingly.
Let me conclude by stating that I'm pleased with the company's performance in this challenging time for the commercial aerospace industry and with our commitment to driving value for our stakeholders.
The commercial aerospace market recovery continues to progress, and current trends are encouraging.
There is still uncertainty about the pace of the recovery, but the team remains focused on controlling what we can control.
We remain confident that in the fullness of time, the commercial aerospace market will return to pre-pandemic levels.
We look forward to fiscal '22 and the opportunity to create value for our stakeholders through our consistent strategy.
Now let me hand it over to Jorge to review our recent performance and a few other items.
I'm glad to be speaking with all of you today and look forward to being on these calls in the future.
I'll start with our typical review of results by key market category.
For the remainder of the call, I'll provide color commentary on a pro forma basis compared to the prior year period in 2020.
That is assuming we own the same mix of businesses in both periods.
This market discussion includes the acquisition of Cobham Aero Connectivity.
We began to include Cobham in this market analysis discussion in the second quarter of fiscal 2021.
This market discussion also removes the impact of any divestitures completed in fiscal 2021.
In the commercial market, which typically makes up close to 65% of our revenue, we will split our discussion into OEM and aftermarket.
Our total commercial OEM revenue increased approximately 1% in Q4 and declined approximately 25% for full year fiscal 2021 compared with prior year periods.
Bookings in the quarter were very strong compared to the same prior year period and solidly outpaced sales.
Sequentially, both Q4 revenue and bookings improved approximately 5% compared to Q3.
Although we expect demand for our commercial OEM products to continue to be reduced in the short term, we are encouraged by build rates gradually progressing at the commercial OEMs. Recent commentary from Airbus and Boeing reiterated anticipated rate ramps for their narrow-body platforms in the near future.
Hopefully, this will play out as forecasted.
Now moving on to our commercial aftermarket business discussion.
Total commercial aftermarket revenue increased by approximately 41% in Q4 and declined approximately 18% for full year fiscal 2021 when compared with prior year periods.
Growth in commercial aftermarket revenue was primarily driven by increased demand in our passenger submarket, although all of our commercial aftermarket submarkets were up significantly compared to prior year Q4.
Sequentially, total commercial aftermarket revenues grew approximately 14%, and bookings grew more than 25%.
Commercial aftermarket bookings are up significantly this quarter compared to the same prior year period, and Q4 bookings very solidly outpaced sales.
To touch on a few points of consideration, global revenue passenger miles are still low but have been modestly improving throughout fiscal 2021.
IATA recently forecast a 39% decrease in revenue passenger miles in calendar year 2022 compared to pre-pandemic levels.
Within IATA's estimate is the expectation that domestic travel will be back to 93% of pre-pandemic levels in calendar year 2022.
Though the pace of the recovery remains uncertain, we continue to believe there is pent-up demand for travel.
As vaccine distribution expands and travel restrictions are rolled back, passenger demand across the globe will increase.
The emergence and spread of COVID variants and other future evolutions may further complicate this picture, but for now, trends remain positive.
We see evidence of the pent-up demand through the recovery in domestic travel.
Domestic air traffic trended upward throughout fiscal 2021.
Airlines also continued to see strength in bookings and strong demand for domestic travel, especially in the U.S., with Europe catching up.
China is currently a watch point with its recent drop-off in air traffic.
The pace of the international air traffic recovery has been slow, and international revenue passenger miles have only slightly recovered.
However, vaccinations continue to increase globally, and governments across the world are starting to reduce travel restrictions, which provides for optimism on the international air traffic recovery.
Cargo demand has recovered more quickly than commercial travel due to the loss of passenger belly cargo and the pickup in e-commerce.
Global cargo volumes continue to surpass pre-COVID levels, and it is generally expected that airfreight demand will likely remain robust into 2022.
Business jet utilization in certain regions rebounded to pre-pandemic or better levels earlier this year and remain strong.
Commentary from business jet OEMs and operators has been encouraging with these higher levels of business jet activity may be here to stay, though time will tell.
Now let me speak about our defense market, which traditionally is at or below 35% of our total revenue.
The defense market revenue, which includes both OEM and aftermarket revenues, grew by approximately 2% in Q4 and approximately 5% from full year fiscal 2020 when compared with prior year periods.
This was in line with the expected revenue growth expectations we provided for fiscal 2021 of mid-single-digit percent range growth.
We continue to expect our defense business to expand due to the strength of our current order book.
As Kevin mentioned earlier, we expect low single-digit percentage range growth in fiscal 2022 for our defense market revenues.
Lastly, I'd like to wrap up by stating how extremely pleased I am by our operational performance throughout this fiscal year that continued to be heavily impacted by the pandemic.
Our management and their teams remain diligent and focused on our value drivers and will continue to do so in this new fiscal year.
We are ready to meet the demand as it returns.
I'm going to first quickly hit on profitability trends for the business, then address a few additional financial matters for fiscal '21.
And finally, I'll provide some more detail on expectations for fiscal '22.
First, in regard to profitability for fiscal '21, EBITDA as defined of about 636 million for Q4 was up 28% versus prior year Q4.
On a full year basis, EBITDA as defined was about 2.19 billion, down 4% from the prior year.
EBITDA as defined margin in the quarter was approximately 49.7%.
This represents sequential improvement in our EBITDA as defined margin of almost 400 basis points versus Q3 of '21.
Moving on, a few quick notes on the full '21 fiscal year.
I want to provide one quick M&A-related data point that you might find helpful for your financial models as we head into FY '22.
As you know, we divested several businesses during 2021, all of which were sold out of continuing operations.
As a result of the accounting treatment applied, roughly 130 million of revenue and 25 to 30 million of EBITDA as defined from these divested operating units remains in our FY '21 results.
This revenue and EBITDA will obviously not carry over into FY '22.
On cash and liquidity, we ended the year with approximately 4.8 billion of cash on the balance sheet, and our net debt-to-EBITDA ratio was seven times.
In the early days of October, we repaid the 200 million revolver drawdown that we made at the onset of COVID back in April of 2020.
This was done out of an abundance of caution at the time, and we don't need the cash, so we've repaid it.
Pro forma for the revolver paydown, our cash balance is 4.6 billion.
Next, on the FY '22 expectations.
We aren't giving full guidance, as Kevin mentioned, but we are providing guidance on select financial metrics, including the following.
Interest expense is expected to be about 1.08 billion in FY '22.
On taxes, our fiscal '22 GAAP and cash rates are anticipated to be in the range of 21 to 24%, and the adjusted tax rate will be a few points higher and in the range of 26 to 28%.
On the share count, we expect our weighted average shares outstanding will increase by about 800,000 shares to 59.2 million in FY '22, and that assumes no buybacks occur during the fiscal year.
Similar to prior years, the increase in shares outstanding is due to employee stock options that vested at the end of our FY '21.
With regard to liquidity, we expect to continue running free cash flow-positive throughout FY '22.
As we traditionally define our free cash flow from operations at TransDigm, which as a reminder is our EBITDA as defined less debt interest payments, less capex, less cash taxes, we expect this metric to be in the 1 billion area, maybe a little better, in fiscal '22.
Assuming no M&A, no dividends or share repurchases, and no additional debt capital markets activities, this free cash flow generation, together with a higher EBITDA figure, should the COVID rebound continue, will likely reduce our net debt-to-EBITDA ratio to something more like six times at the end of fiscal '22 versus the current seven times level.
Finally, one last note on the DoD Inspector General audit.
As we mentioned previously, we've been actively engaged with the IG office with some ebbs and flows, and this engagement is now complete.
And our best assessment and based upon what we saw, this audit appeared to be similar in scope to prior audits.
While it's difficult to know exactly when a final report will be issued publicly, we expect that this could happen any day now, very likely during the first quarter of our fiscal '22.

user
will not provide full fiscal year 2022 guidance at this time.

assistant