Author Topic: TDG - Transdigm  (Read 103996 times)

giofranchi

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Re: TDG - Transdigm
« Reply #10 on: February 04, 2014, 05:18:51 AM »
Quote
TransDigm Group Reports Fiscal 2014 First Quarter Results

CLEVELAND, Feb. 4, 2014  /PRNewswire/ -- TransDigm Group Incorporated (NYSE: TDG), a leading global designer, producer and supplier of highly engineered aircraft components, today reported results for the first quarter ended December 28, 2013.

Highlights for the first quarter include:
•Net sales of $529.3 million, up 23.0% from $430.4 million;
•EBITDA As Defined of $243.6 million, up 21.2% from $200.9 million;
•Net income of $86.1 million, up 16.1% from $74.2 million;
•Earnings per share of $1.44, up 118.2% from $0.66;
•Adjusted earnings per share of $1.66, up 9.9% from $1.51; and
•Upward revision to fiscal 2014 financial guidance.

http://www.transdigm.com/phoenix.zhtml?c=196053&p=irol-newsArticle&ID=1896533&highlight=


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Liberty

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Re: TDG - Transdigm
« Reply #11 on: May 06, 2014, 05:52:28 AM »
http://www.transdigm.com/phoenix.zhtml?c=196053&p=irol-newsArticle&ID=1927287&highlight=

Quote
Highlights for the second quarter include:

Net sales of $590.8 million, up 26.9% from $465.6 million;
EBITDA As Defined of $263.0 million, up 19.9% from $219.3 million;
Net income of $90.4 million, up 33.0% from $67.9 million;
Earnings per share of $1.49, up 19.2% from $1.25;
Adjusted earnings per share of $1.87, up 7.5% from $1.74; and
Upward revision to fiscal 2014 financial guidance.

Presentation : http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjMyOTQ0fENoaWxkSUQ9LTF8VHlwZT0z&t=1
« Last Edit: May 06, 2014, 06:00:01 AM by Liberty »
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Olmsted

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Re: TDG - Transdigm
« Reply #12 on: May 06, 2014, 12:39:49 PM »
Great addition to the board.  Thanks for introducing Transdigm for discussion, stahleyp.

I've previously looked at Transdigm's strategy and execution.  It's basically a publicly-traded buyout shop.  They're as good as it gets in aerospace suppliers.  A collection of very niche businesses, with a focus on aftermarket sole-source parts (meaning, they can charge whatever price they want).  They make random stuff that you never think about it.  Like the toilet flush handle in a commercial airliner, or some random gromit on a cockpit door.  Crazy margins for a parts supplier.  The businesses run more or less independently, but the parent is good at squeezing out some costs with supply chain scale.  Very targeted growth.  Although it's an acquisition machine, they still achieve decent organic growth.

My big concern with an investment here: they have achieved tremendous success in rolling up the "long tail" of niche, sole-source parts suppliers.  How much runway does this strategy have left?  How many attractive roll-up candidates are still out there?  The price reflects continued growth.
« Last Edit: May 06, 2014, 12:45:13 PM by Olmsted »

Olmsted

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Re: TDG - Transdigm
« Reply #13 on: May 06, 2014, 12:42:21 PM »
If you are sure that these guys have a huge moat and will grow earnings or cash flow a share by > 10%, then a 20x multiple can be cheap imo.

I am sure they have a moat.  Less clear on growth.  By my reckoning, organic growth has been around 5%.  You have to feel comfortable with their ability to continue to find good acquisitions.

Olmsted

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Re: TDG - Transdigm
« Reply #14 on: May 06, 2014, 12:45:41 PM »
this one is on my buy in a bear market list...

Agreed.  A great watch-list candidate.

Liberty

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Re: TDG - Transdigm
« Reply #15 on: May 06, 2014, 02:10:39 PM »
My big concern with an investment here: they have achieved tremendous success in rolling up the "long tail" of niche, sole-source parts suppliers.  How much runway does this strategy have left?  How many attractive roll-up candidates are still out there?  The price reflects continued growth.

I think they have a huge M&A runway. The industry is gigantic if you take into account both the commercial and defense side. They barely have started buying businesses HQ'ed outside of the US (they have 4 businesses in Europe, but I think 3 came with other businesses, only one - the most recent EME acquisition - was directly acquired in Germany).

In many of their investor day presentations they have slides that show how many potential acquisitions targets they estimate are out there (and what proportion is of what revenue size and EBITDA margins). Looks like a huge fishing pond.

Maybe it'll become a problem in 10-15 years, I don't know, but I don't see it for the foreseeable future...
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siddharth18

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Re: TDG - Transdigm
« Reply #16 on: May 06, 2014, 05:18:40 PM »
Amazing company really. They not only manufacture their parts, but also invent them and hold patent on them. Their strategy is to sell parts for a new airline at a slight loss, to prevent competitors from entering - this is the first few years. Then for the next couple of decades of the life of the airplane, they are the only source for replacement parts. High margins, no competitor to speak of, religious price increases year after year. Airlines may hate them, but can't get rid of them.

A competitor would have to design their own parts, have them FAA approved, convince airlines to buy it from them instead of a reputed leader like TransDigm and of course they have to be better/cheaper than TransDigm. Really a one-of-a-kind company.

Liberty

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Re: TDG - Transdigm
« Reply #17 on: May 06, 2014, 05:26:25 PM »
Amazing company really. They not only manufacture their parts, but also invent them and hold patent on them. Their strategy is to sell parts for a new airline at a slight loss, to prevent competitors from entering - this is the first few years.

I think that's slightly incorrect. They only give parts at a loss while new airplanes/helicopters are in development. Once they are in production, they make money on what they sell to OEMs. It's just that the margins there are much lower than in the aftermarket.

They do sell relatively inexpensive parts for which they are the sole source in about 90% of the cases, so it's usually not worth it for anyone else to go through the trouble of developing a competing part and getting it certified for a platform (a process that is long and expensive, and doesn't even guarantee they'll be able to steal much business from Transdigm because there are also non-monetary factors -- airlines care a lot about safety, and won't risk putting a part from a manufacturer that doesn't have the good reputation of transdigm just to save a few bucks. Not a good risk/reward profile).

Transdigm is very good operationally too. They tend to buy businesses making margins in the 20% EBITDA range most of the time as far as I can tell, and over time bring them up to their own average which is in the high 40s. Anyone trying to compete with them likely won't have their low costs, so if they do get competition, TDG can probably undercut them and still make a profit because they have more margin to play with.
« Last Edit: May 06, 2014, 05:32:38 PM by Liberty »
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Liberty

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Re: TDG - Transdigm
« Reply #18 on: May 12, 2014, 04:36:27 PM »
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wbr

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Re: TDG - Transdigm
« Reply #19 on: May 13, 2014, 04:37:03 AM »
Are the TDG special dividends "return of capital" and thus tax free?