Author Topic: TDG - Transdigm  (Read 135075 times)

Larry

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Re: TDG - Transdigm
« Reply #220 on: May 24, 2016, 07:51:13 AM »
Wow thats a pretty sizable one. Definitely one of the largest they've done. I was thinking they might do a special dividend if the pipeline is getting light but it is surely out of question now.

They bought Telair for $725m and that had $300m in revenue (with 20% EBITDA margins). However DDC is anticipated to have revenues of "over $200m" for 2016 but they are paying $1.0 billion. They must have higher margins (but how much?) than Telair but on the otherhand DDC is 70% military, just a bit puzzled.

It'll be interesting to see how much they disclose about it during the next call. Things that are probably better than at Telair to account for the higher price: margins, growth potential, ratio of aftermarket, ratio or proprietary sole source.

Here's the info they initially gave on Telair:

Quote
Telair revenues are anticipated to be about $300 million with EBITDA margins approaching 20% for fiscal year ending May 2015. Over 80% of revenues are from the commercial aerospace market with the balance from the military aerospace market. Approximately 45% of revenues come from the aftermarket, primarily commercial transport and cargo aircraft. Approximately 95% of the revenues are from proprietary products with about 80% sold on a sole source basis.

As you can see, aftermarket is only 45% vs 70% for DDC, and sole source is 80% vs. "nearly all of the revenue from proprietary and sole source products" for DDC.

Yea Telair's aftermarket was lighter. But I think military aftermarket has way lower margins than commercial transport aftermarket and you can use more pricing in commercial. I might remember wrong but this is what I recall. But the difference in price is still very big.

This is the first acquisition (since I have followed TDG) that got me thinking they might pay too much. I mean this business might have high margins, but I highly doubt it. Their playbook has been to atleast double the EBITDA which leads to purchase multiple halving. I dont see whats the "value case" here. But these guys are very smart in what they do so obviously there has to be something. We will have to wait couple months for the call.

Schwab thank you for the links, have to check them later! (Wrote this in hurry)
« Last Edit: May 24, 2016, 07:52:53 AM by Larry »


Liberty

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Re: TDG - Transdigm
« Reply #221 on: May 25, 2016, 10:18:55 AM »
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Larry

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Re: TDG - Transdigm
« Reply #222 on: May 27, 2016, 01:23:08 PM »
Quote
TransDigm to Host Analyst Day in New York City

CLEVELAND, May 27, 2016 /PRNewswire/ -- TransDigm Group Incorporated (NYSE: TDG), a leading global designer, producer and supplier of highly engineered aircraft components, announced today that it will host its 2016 Investor Conference on Thursday, June 23, 2016 in New York City. 

Faster than Liberty this time.

This will surely be interesting. I would love to hear comments on DDC acquisition, however if the deal doesn't close until analyst day, I think its unlikely that they will comment much on this.

Schwab711

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Re: TDG - Transdigm
« Reply #223 on: May 27, 2016, 01:30:15 PM »
Quote
TransDigm to Host Analyst Day in New York City

CLEVELAND, May 27, 2016 /PRNewswire/ -- TransDigm Group Incorporated (NYSE: TDG), a leading global designer, producer and supplier of highly engineered aircraft components, announced today that it will host its 2016 Investor Conference on Thursday, June 23, 2016 in New York City. 

Faster than Liberty this time.

This will surely be interesting. I would love to hear comments on DDC acquisition, however if the deal doesn't close until analyst day, I think its unlikely that they will comment much on this.

If anyone is going to this would they be willing to share their notes? Please pm me if you are or could attend!

Liberty

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Re: TDG - Transdigm
« Reply #224 on: May 27, 2016, 05:50:02 PM »
Schwab, I think they usually stream the whole day.

Also, TDG will join the SP500 on june 2, up about 4% after hours.
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Schwab711

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Liberty

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Re: TDG - Transdigm
« Reply #226 on: June 23, 2016, 06:10:39 AM »
http://seekingalpha.com/pr/16528751-transdigm-completes-acquisition-data-device-corporation

Today is also their analyst day in NYC. They usually stream the audio, but I haven't seen a way to listen-in this time. If anyone is going and has notes to share, or if anyone finds a stream or recording, I'd appreciate it if you shared. Thanks.
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Larry

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Re: TDG - Transdigm
« Reply #227 on: June 23, 2016, 02:22:10 PM »
I ran quickly through the analyst day slides.

Hopefully the webcast will be available tomorrow when I get home.
« Last Edit: June 25, 2016, 04:30:55 AM by Larry »

Liberty

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Re: TDG - Transdigm
« Reply #228 on: July 05, 2016, 05:10:15 PM »
I ran quickly through the analyst day slides.

Hopefully the webcast will be available tomorrow when I get home.

The webcast is now on the site.

https://content.jwplatform.com/previews/TFDXva1u-mxrau2jZ
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Oreo

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Re: TDG - Transdigm
« Reply #229 on: July 05, 2016, 05:38:08 PM »
I know the bull case and I am almost certain that I will get flamed here for saying this, but i am tempted to go short here. A few put options out there that are reasonably priced; I wish they were longer-dated, though.
Preliminary rationale.

1. I am struggling to work out what is the normalized level of free cash flow (levered or unlevered) that this business would generate if it suddenly stopped doing acquisitions.

2. I also think that at some point the economic rent that TDG is extracting via its high margins will start to flow back to its customers.

3. At this point in the economic cycle, I'd rather bet against things that are net-levered 6x.

4. Some of the other actors in the value chain are struggling.