Kevin M. Stein
President, Chief Executive Officer, and Director 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 '24 outlook. Then, Mike and Sarah will give additional color on the quarter. As we previously announced on October 27, we had two directors retire from the TransDigm Board, Merv Dunn and John Staer. Merv has served on our board since 2009 and John since 2012. We sincerely appreciate both Merv and John's dedication to TransDigm over the years. They each have done an outstanding job as directors and truly contributed to the long-term value creation at TransDigm. Considering these two director retirements, our board is now comprised of 10 directors. For the near term, we feel our board size of 10 is appropriate and composed of highly qualified leaders with the appropriate skill sets to oversee and guide TransDigm. However, as we always do, we will continue to regularly assess the board composition into the future.
Now moving on to the business of today. To reiterate, we believe 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. Our 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. First, we own and operate proprietary aerospace businesses with significant aftermarket content. Second, we utilize a simple well-proven, value-based operating methodology. Third, we have a decentralized organizational structure and unique compensation system, closely aligned with shareholders. Fourth, we acquire businesses that fit the strategy and where we see a clear path to PE-like returns. And lastly, our capital structure and allocations are 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 closed out the year with another good quarter. We had solid operating performance in Q4 with both total revenue and EBITDA as defined margin coming in strong. For the full year, fiscal '23 revenue came in at the high end of our most recently published guidance, and our fiscal '23 EBITDA as defined margin surpass that guidance.
Commercial aerospace market trends remained favorable as the industry continues to recover and progress towards normalization. Global air traffic is still moving forward and demand for travel remains high. OEMs are making steady headway on aircraft production. However, total air travel remains slightly below pre-COVID levels and OEM aircraft production rates remain well below pre-pandemic levels. There is still progress to be made for the industry and our results continue to be adversely affected in comparison to pre-pandemic levels.
In our business during the quarter, we saw a healthy growth in our revenues and bookings for all three of our major market channels: Commercial OEM, commercial aftermarket, and defense. Revenues also sequentially improved in all three of these market channels. Our EBITDA as defined margin was 52% in the quarter. Contributing to this strong margin is the continued recovery in our commercial aftermarket revenues, along with our strict operational focus and disciplined approach to cost structure management. Additionally, we had good operating cash flow generation in Q4 of over $460 million and ended the quarter with close to $3.5 billion of cash. We expect to steadily generate significant additional cash through 2024.
Next, an update on our capital allocation activities and priorities. As was mentioned in our press release, we've decided to pay a special dividend of $35 per share. The dividend will be paid on November 27. Sarah will address this more later. In aggregate, including Calspan acquisition completed this past May, and this dividend to be paid in late November, we have allocated over $2.7 billion of capital to -- in the interest of our shareholders in under seven months.
Also, we disclosed in our press release earlier today, we agreed to acquire the Electron Device business of Communications & Power Industries, also known as CPI, for approximately $1.385 billion in cash. CPI's Electron Device business is a leading global manufacturer of electronic components and subsystems, primarily serving the aerospace and defense market. The products manufactured by this business are highly-engineered proprietary components with significant aftermarket content and a strong presence across major aerospace and defense platforms. CPI's Electron Device business generated approximately $300 million in revenue for its fiscal year ended September 30, 2023. The acquisition is currently expected to close by the end of the third quarter of our fiscal 2024. As mentioned earlier, we are exiting fiscal '23 with a sizable cash balance of close to $3.5 billion. Pro forma for the dividend, our fiscal year end cash balance is over $1.4 billion and growing. As always, we continue to closely monitor the credit markets, and we'll be assessing opportunities to utilize leverage for the acquisition of CPI's Electron Devices business and general corporate purposes, which may include potential future acquisitions, share repurchases under our stock repurchase program, and dividends.
Regarding the current M&A pipeline, we continue to actively look for M&A opportunities that fit our model. As we look out over the next 12 to 18 months, we continue to have a slightly stronger than typical pipeline of potential targets, and remain encouraged concerning deal flow. As usual, the potential targets are mostly in the small and midsize 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.
As we move into our new fiscal year, the capital allocation priorities at TransDigm are unchanged. Our first priority is to reinvest in our businesses; second, do accretive disciplined 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 still do take this into consideration.
Moving to our outlook for fiscal 2024. The guidance assumes no additional acquisitions or divestitures and is based on current expectations for a continued recovery in our primary commercial end markets through fiscal '24. Throughout fiscal '23, we were encouraged by the recovery seen in our commercial revenues and strong booking trends. Our strong bookings support the fiscal '24 commercial end market revenue guidance, which I will comment on shortly. Trends are positive across all three of our major market channels: Commercial OEM, commercial aftermarket, and defense. We are cautiously optimistic that the prevailing conditions will continue to evolve favorably. We will watch this closely, as we always do, and we will react as necessary, including taking any preemptive steps that might be warranted. Changes in market condition and the impact to our primary end markets could lead to reviews -- revisions in our guidance for 2024.
Our initial guidance for the fiscal 2024 continuing operations is as follows, and can also be found on Slide 7 in the presentation. The pending acquisition of CPI's Electron Device business is excluded from this guidance. The midpoint of our fiscal '24 revenue guidance of $7.58 billion, or up approximately 15%. As a reminder, and consistent with past years with roughly 10% less working days than the subsequent quarters, fiscal 2024 Q1 revenues, EBITDA, and EBITDA margins are anticipated to be lower than the other three quarters of '24. This revenue guidance is based on the following market channel growth rate assumptions. We expect commercial OEM revenue growth around 20%, commercial aftermarket revenue growth in the mid-teens percentage range, and defense revenue growth in the mid- to high-single-digit percentage range.
The midpoint of fiscal 2024 EBITDA as defined guidance is $3.94 billion, or up approximately 16% with an expected margin of around 52%. This guidance includes about 100 basis points of margin dilution from our recent Calspan acquisition. We anticipate EBITDA margin will move up throughout the year, with Q1 being the lowest, and sequentially lower than Q4 of fiscal 2023. The midpoint of adjusted EPS is anticipated to be $31.97, or up approximately 24%. Sarah will discuss in more detail shortly the factors impacting EPS, along with some other fiscal '24 financial assumptions and updates.
We believe we are well-positioned as we enter fiscal '24. As usual, we will continue to closely watch how the aerospace and capital markets continue to develop and react accordingly.
Let me conclude by stating that I'm very pleased with the company's performance this year and throughout the recovery for the commercial aerospace industry. We remain focused on our value drivers, cost structure, and operational excellence. We look forward to fiscal 2024 and expect that our consistent strategy will continue to provide the value you have come to expect from us.
Now, let me hand it over to Mike Lisman, our TransDigm Group Co-COO, to review our recent performance and a few other items.
