Author Topic: TDG - Transdigm  (Read 139980 times)

Gregmal

  • Hero Member
  • *****
  • Posts: 2042
Re: TDG - Transdigm
« Reply #280 on: January 21, 2017, 05:42:35 PM »
What I've found is that after rather extraordinary events, everything becomes "the next (such and such)". There were plenty of "the next Enrons", plenty of well written and documented articles on "the next financial crisis", etc. VRX was rather incredible. Since the blow up, I've probably read a half dozen articles or write ups on "the next Valeant". The truth is, these rarely happen because people now look out for them. The next black swan will come from somewhere unexpected. And then there will be thirty million articles on "the next black swan".


undervalued

  • Sr. Member
  • ****
  • Posts: 381
Re: TDG - Transdigm
« Reply #281 on: January 24, 2017, 12:27:12 PM »
So I am reading TDG's 2016 proxy statement, on page 26 it says

Quote
Optionholders who hold vested stock options at the time a dividend is paid will receive a cash dividend equivalent
payment equal to the amount that he or she would otherwise have been entitled to receive had his or her vested stock
option been exercised immediately prior to payment of the dividend. Optionholders who hold unvested stock options may
receive a cash dividend equivalent payment equal to the amount he or she would otherwise have been entitled to receive
had his or her unvested stock option been vested and exercised immediately prior to payment of the dividend, but only if
and when such stock option vests pursuant to its terms. We believe that we have structured dividend equivalent
payments under the Company’s dividend equivalent plans such that they are not subject to any excise tax under
Section 409A of the Internal Revenue Code. Certain investors and proxy advisory firms have raised the issue as to
whether the Company should pay dividend equivalents only upon an exercise of the options; however, we believe that
tying payment of the dividend equivalents to the exercise of an option would result in excise taxes under Section 409A

Does this means options holders get paid before they actually exercise their options and they get paid special dividend just for holding the options? I guess this is one reason why management prefer special dividend rather than actual dividend. They can add loopholes around special dividend.
« Last Edit: January 24, 2017, 03:51:05 PM by undervalued »
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. - Will Rogers

thefatbaboon

  • Sr. Member
  • ****
  • Posts: 486
Re: TDG - Transdigm
« Reply #282 on: January 25, 2017, 07:28:33 AM »
Yes they receive the dividend if the options have vested or end up vesting.

Why is this a problem for you?  It allows for a less conflicted analysis by management of share repo versus dividend.  And it doesn't force management to exercise at a time that may not be convenient or in a way and at a cost that may require a faster sale (to meet taxes on gains).

I have no problem with this. 

KCLarkin

  • Hero Member
  • *****
  • Posts: 1676
Re: TDG - Transdigm
« Reply #283 on: January 25, 2017, 08:56:11 AM »
How are people comfortable with the extreme leverage that Transdigm uses? Under normal business conditions, the business is pretty robust. But what happens if airlines start parking planes in the desert and cannibalizing planes for spare parts (e.g. 9/11)?

cmlber

  • Sr. Member
  • ****
  • Posts: 464
Re: TDG - Transdigm
« Reply #284 on: January 25, 2017, 09:21:33 AM »
How are people comfortable with the extreme leverage that Transdigm uses? Under normal business conditions, the business is pretty robust. But what happens if airlines start parking planes in the desert and cannibalizing planes for spare parts (e.g. 9/11)?

EBITDA has grown every year since 1993 including 2001, and they have no near term debt maturities.

KCLarkin

  • Hero Member
  • *****
  • Posts: 1676
Re: TDG - Transdigm
« Reply #285 on: January 25, 2017, 09:42:08 AM »
How are people comfortable with the extreme leverage that Transdigm uses? Under normal business conditions, the business is pretty robust. But what happens if airlines start parking planes in the desert and cannibalizing planes for spare parts (e.g. 9/11)?

EBITDA has grown every year since 1993 including 2001, and they have no near term debt maturities.

Thanks. Didn't realize they had financials available prior to the 2006 IPO.

scorpioncapital

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1724
    • scorpion capital
Re: TDG - Transdigm
« Reply #286 on: January 25, 2017, 09:56:45 AM »
"EBITDA has grown every year since 1993"

Interesting you bring up the year 1993...That's the year that a severe aerospace downturn 'turned', after several suppliers went bankrupt due to declining sales and high debt. No doubt a company that starts in the dark days of a recession like 2009 has a very low base and can show good results. Perhaps this is a really long cycle. I'm not sure it's not a cycle though.

cmlber

  • Sr. Member
  • ****
  • Posts: 464
Re: TDG - Transdigm
« Reply #287 on: January 25, 2017, 11:50:05 AM »
How are people comfortable with the extreme leverage that Transdigm uses? Under normal business conditions, the business is pretty robust. But what happens if airlines start parking planes in the desert and cannibalizing planes for spare parts (e.g. 9/11)?

EBITDA has grown every year since 1993 including 2001, and they have no near term debt maturities.

Thanks. Didn't realize they had financials available prior to the 2006 IPO.

They don't have full financials available, but they provide revenue and EBITDA as Defined for every year back to the founding in 1993 on each of the investor day presentations. 

Most of these parts are mandatory repairs.  The FAA has guidelines that essentially say "Once you've flown X miles, part A shall be replaced."  The options are ground the plane, or pay whatever price TDG asks. 

Jurgis

  • Hero Member
  • *****
  • Posts: 4556
    • Porfolio
Re: TDG - Transdigm
« Reply #288 on: January 25, 2017, 11:56:56 AM »
And I guess it's not easy to persuade FAA to accept replacement parts harvested from old planes...


With that said a large reduction of miles flown would hit TDG.
"Before you can be rich, you must be poor." - Nef Anyo
--------------------------------------------------------------------
"American History X", "Milk", "The Insider", "Dirty Money", "LBJ"

KCLarkin

  • Hero Member
  • *****
  • Posts: 1676
Re: TDG - Transdigm
« Reply #289 on: January 25, 2017, 12:08:57 PM »
They don't have full financials available, but they provide revenue and EBITDA as Defined for every year back to the founding in 1993 on each of the investor day presentations. 

Actually, full 10Ks seem to be available.