Author Topic: TDG - Transdigm  (Read 136322 times)

elevensecsrt4

  • Jr. Member
  • **
  • Posts: 53
Re: TDG - Transdigm
« Reply #50 on: September 13, 2014, 09:34:50 AM »
I actually bought a small position as I continue to research the company further.
Insiders seem to love it at this level. I plan on holding for very long term. And like that the dividends usually lower overall per share cost, under the way they describe part of the dividend payment return of capital. Well run company, but not cheap.


Liberty

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 11253
  • twitter.com/libertyRPF
    • twitter.com/libertyRPF
Re: TDG - Transdigm
« Reply #51 on: November 13, 2014, 04:57:33 AM »
http://www.transdigm.com/phoenix.zhtml?c=196053&p=irol-newsArticle&ID=1989275

Quote
Highlights for the quarter and fiscal year include:

Fourth quarter net sales of $642.2 million, up 19.0% from $539.7 million;
Fourth quarter EBITDA As Defined of $291.1 million, up 17.3% from $248.2 million;
Fourth quarter adjusted earnings per share of $2.21, up 26.3% from $1.75;
Fiscal 2014 net sales of $2,372.9 million, up 23.3% from $1,924.4 million;
Fiscal 2014 EBITDA As Defined of $1,073.2 million, up 19.2% from $900.3 million;
Fiscal 2014 net income of $306.9 million, up 1.4% from $302.8 million;
Fiscal 2014 earnings per share of $3.16, up 32.2% from $2.39; and
Fiscal 2014 adjusted earnings per share of $7.76, up 12.5% from $6.90.

There's also been some new about the COO:

http://www.transdigm.com/phoenix.zhtml?c=196053&p=irol-newsArticle&ID=1976928

http://www.transdigm.com/phoenix.zhtml?c=196053&p=irol-newsArticle&ID=1976929
« Last Edit: November 13, 2014, 05:00:01 AM by Liberty »
"Most haystacks don't even have a needle." |  I'm on Twitter  | This podcast episode is a must-listen

muscleman

  • Hero Member
  • *****
  • Posts: 3060
Re: TDG - Transdigm
« Reply #52 on: November 13, 2014, 08:35:35 AM »
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...

How much additional growth room would you expect? Any quantitative guess?
AMZN for example, I could say that the current online sales/total retail sales is less than 1%, so there is probably a lot of growth in the future.
But how about this after market plane parts business?

Liberty

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 11253
  • twitter.com/libertyRPF
    • twitter.com/libertyRPF
Re: TDG - Transdigm
« Reply #53 on: November 13, 2014, 09:53:59 AM »
I can't say quantitatively. Multiples of the current size is probably right. This is a really huge industry.

But it's not with the top line that shareholders will be paid anyway, it's with per share FCF. The way they shrink the equity with huge special dividends and buy back shares, it's clear that they aren't empire-building and trying to swallow everything in sight, they care about per share returns and have high hurdles.
"Most haystacks don't even have a needle." |  I'm on Twitter  | This podcast episode is a must-listen

muscleman

  • Hero Member
  • *****
  • Posts: 3060
Re: TDG - Transdigm
« Reply #54 on: November 13, 2014, 09:57:31 AM »
I can't say quantitatively. Multiples of the current size is probably right. This is a really huge industry.

But it's not with the top line that shareholders will be paid anyway, it's with per share FCF. The way they shrink the equity with huge special dividends and buy back shares, it's clear that they aren't empire-building and trying to swallow everything in sight, they care about per share returns and have high hurdles.

That's true. Why did they buy back shares at the lofty 20 x pe this year? Is that an attempt to push up the stock price so they can get their options vested, or it really justifies the valuation?
They said the FCF is about 55% of EBITDA. How would I verify that is the case? Their machines will depreciate and needs maintainence capex for sure, but how much would that be?

Liberty

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 11253
  • twitter.com/libertyRPF
    • twitter.com/libertyRPF
Re: TDG - Transdigm
« Reply #55 on: November 13, 2014, 10:06:43 AM »
I can't say quantitatively. Multiples of the current size is probably right. This is a really huge industry.

But it's not with the top line that shareholders will be paid anyway, it's with per share FCF. The way they shrink the equity with huge special dividends and buy back shares, it's clear that they aren't empire-building and trying to swallow everything in sight, they care about per share returns and have high hurdles.

That's true. Why did they buy back shares at the lofty 20 x pe this year? Is that an attempt to push up the stock price so they can get their options vested, or it really justifies the valuation?
They said the FCF is about 55% of EBITDA. How would I verify that is the case? Their machines will depreciate and needs maintainence capex for sure, but how much would that be?

How about reading the 10Ks and transcripts of calls and investor days?
"Most haystacks don't even have a needle." |  I'm on Twitter  | This podcast episode is a must-listen

muscleman

  • Hero Member
  • *****
  • Posts: 3060
Re: TDG - Transdigm
« Reply #56 on: November 19, 2014, 08:30:29 AM »
I actually bought a small position as I continue to research the company further.
Insiders seem to love it at this level. I plan on holding for very long term. And like that the dividends usually lower overall per share cost, under the way they describe part of the dividend payment return of capital. Well run company, but not cheap.

What's your thoughts upon your research? I can't figure out how much more growth they have.

rishig

  • Sr. Member
  • ****
  • Posts: 435
Re: TDG - Transdigm
« Reply #57 on: November 19, 2014, 09:02:44 AM »
I actually bought a small position as I continue to research the company further.
Insiders seem to love it at this level. I plan on holding for very long term. And like that the dividends usually lower overall per share cost, under the way they describe part of the dividend payment return of capital. Well run company, but not cheap.

What's your thoughts upon your research? I can't figure out how much more growth they have.

Has anyone looked at smaller aero supplier companies like Meggitt PLC and MTU Aero Engines. The same economics that apply to the Transdigm companies apply here (mostly, other than the private equity style of TDG) - single source supplier of a component, great margin on aftermarket division, long stream of recurring revenues through aftermarket. In fact, these smaller companies are possible acquisition targets for Transdigm (GE aero ..). I think the problem is that everyone recognizes this is a great business and very very rarely they become cheap.

Liberty

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 11253
  • twitter.com/libertyRPF
    • twitter.com/libertyRPF
Re: TDG - Transdigm
« Reply #58 on: January 27, 2015, 08:24:14 AM »
Quarter is out. Looks good to me. If they hadn't done the special dividend and their interest costs were the same YoY, net income would be up around 30%, which shows the underlying earning power.

http://www.transdigm.com/phoenix.zhtml?c=196053&p=irol-newsArticle&ID=2010768

Quote
Net sales of $586.9 million, up 10.9% from $529.3 million;
EBITDA As Defined of $269.7 million, up 10.7% from $243.6 million;
Net income of $95.5 million, up 10.9% from $86.1 million;
Earnings per share of $1.63, up 13.2% from $1.44;
Adjusted earnings per share of $1.80, up 8.4% from $1.66; and
Reaffirms previously stated Fiscal 2015 financial guidance.

Here's the audio of the call if anyone wants it:

https://www.dropbox.com/s/aiqygqjwul72s8x/2015-Q1-TDG-CC.m4a?dl=0
« Last Edit: January 27, 2015, 08:39:39 AM by Liberty »
"Most haystacks don't even have a needle." |  I'm on Twitter  | This podcast episode is a must-listen

muscleman

  • Hero Member
  • *****
  • Posts: 3060
Re: TDG - Transdigm
« Reply #59 on: January 27, 2015, 11:11:09 AM »
Nice EPS growth. 30 P/E seems to high to me though to buy. :(