Author Topic: TDG - Transdigm  (Read 134602 times)

Liberty

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Re: TDG - Transdigm
« Reply #380 on: July 13, 2018, 06:19:39 AM »
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Liberty

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Re: TDG - Transdigm
« Reply #381 on: August 07, 2018, 06:03:42 AM »
Fiscal Q3:

https://www.transdigm.com/investor-relations/news-releases/news-article/?myartid=2362418

Quote
Highlights for the third quarter include:

Net sales of $980.7 million, up 9.2% from $897.7 million;
Net income from continuing operations of $217.4 million, up 28.0% from $169.8 million;
Earnings per share from continuing operations of $3.91, up 26.5% from $3.09;
EBITDA As Defined of $487.1 million, up 8.8% from $447.6 million;
Adjusted earnings per share of $4.01, up 19.0% from $3.37; and
Revisions to fiscal 2018 financial guidance.
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walkie518

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Re: TDG - Transdigm
« Reply #382 on: August 07, 2018, 08:45:51 AM »
Fiscal Q3:

https://www.transdigm.com/investor-relations/news-releases/news-article/?myartid=2362418

Quote
Highlights for the third quarter include:

Net sales of $980.7 million, up 9.2% from $897.7 million;
Net income from continuing operations of $217.4 million, up 28.0% from $169.8 million;
Earnings per share from continuing operations of $3.91, up 26.5% from $3.09;
EBITDA As Defined of $487.1 million, up 8.8% from $447.6 million;
Adjusted earnings per share of $4.01, up 19.0% from $3.37; and
Revisions to fiscal 2018 financial guidance.
drop must be on guidance change?

Liberty

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Re: TDG - Transdigm
« Reply #383 on: October 10, 2018, 07:04:48 AM »
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Leverage Capabilities

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Re: TDG - Transdigm
« Reply #384 on: October 10, 2018, 11:06:58 AM »
Will need to dig into ESL a little more, but I'm getting ~12x '19E EBITDA (consensus) which is at the high end of their target multiple (9-12x). I'd say given how hot the M&A markets have been overall, this isn't a terrible price to pay. Will be curious to see how easy it is to get to their targeted 50% multiple reduction.

I guess we won't be getting another special dividend any time soon

voyager

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Re: TDG - Transdigm
« Reply #385 on: October 10, 2018, 06:58:32 PM »
I'd bet that there is a lot of overhead overlap between the two companies.....

They also acquired something from them before, so they probably got insight into their operations and know they can run them better.

Liberty

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Liberty

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Re: TDG - Transdigm
« Reply #387 on: February 05, 2019, 06:28:02 AM »
Q4:

http://www.transdigm.com/investor-relations/news-releases/news-article/?myartid=2386031

Quote
Net sales of $993.3 million, up 17.1% from $848.0 million;
Net income from continuing operations of $196.0 million, down 37.2% from $312.0 million;
Earnings per share from continuing operations of $3.05, down 33.7% from $4.60;
EBITDA As Defined of $486.7 million, up 21.2% from $401.5 million;
Adjusted earnings per share of $3.85, down 31.0% from $5.58, with the prior year period including $2.65 per share of one-time favorable impact from the enactment of tax reform; and
Upward revision to fiscal 2019 financial guidance.
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writser

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Re: TDG - Transdigm
« Reply #388 on: April 09, 2019, 01:11:09 PM »
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.

khturbo

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Re: TDG - Transdigm
« Reply #389 on: April 09, 2019, 01:45:06 PM »
I might as well respond to this here. I'm the person that posted the joke gif above. The tweet about doing more than reading one article was too snappy on my part, I do admit.

I talked with Tepper about the company privately as I mentioned might be better on the twitter thread.

First and foremost, if you're interested in the company and haven't read the Dod IG report, that's the first thing you should do. The whole thing is at the bottom of this page:

https://www.dodig.mil/reports.html/Article/1769041/review-of-parts-purchased-from-transdigm-group-inc-dodig-2019-060/

Read the whole report at the link at the bottom, not just the summary.

First and foremost, the actual business impact isn't super enormous. Using some data from the report, it seems like the revenue run-rate is in the $100-150mm range to the DoD. If they legislated tomorrow the 15% margin that they use then TDG's EBITDA might go down by $50mm, which would be a ~$15 / share in impact. They've legislated thing to go the other way where they increased the TINA thresholds, so the odds of this are pretty slim, even longer term.

More importantly, I think it's important to address his claim that Transdigm is "evil." Lots of people think this or think that their customers hate them or whatever.

If you know aerospace, you know how important on time delivery is. Just look at what happened to Airbus when they had trouble with their engine supplier. They couldn't deliver their planes. I read an article a little while back about the US government owning 2x the number of F-35s that they need to be combat ready because they know that lots of planes will be waiting on parts and repairs. Those planes cost $100mm a piece. One of the things that Transdigm is very, very good at is delivering on time. There was a slide in a presentation a few years back showing on-time delivery in the mid 90% range. Anyone that knows manufacturing knows that's incredibly high. So when they take over a company, they significantly improve on time delivery metrics. Prices go up as well. But it's not just like the customer is getting screwed. They're getting the parts when they need them, which is much more important than some extra price on such a cheap part.

Secondly, and very importantly, these aren't true monopolies. If you talk to the people that run these businesses, there are market mechanisms where they would lose their positions if they increased prices too much. In some cases it might take 2-3 years, but it can still happen. This is much different than in a situation like pharma where in some cases no one else is allowed to make a drug and you have an absolute monopoly. In aerospace, it's a current monopoly, sure, but with abuse you lose your position. Commercial companies go around OEMs all the time as we've seen with Heico. There are other mechanisms besides PMA parts. If you realize that there are other options, then you realize that charging a lot doesn't force your customer to use you long term, and you realize that it's hard to be evil when your customer has a choice.

Knowing that you can switch suppliers, but also knowing it's a long, difficult process, is it a surprise that the DoD hasn't done this historically? When they aren't exactly spending their own money? They did a similar report in 2006, so they obviously know about TDG. They could have done any number of things to stop working with TDG in the meantime, but they haven't. They keep coming to TDG and saying they need a part tomorrow, so TDG charges a high price. They've asked for a partial refund, which I'm sure TDG will grant. If they really want to stop working with TDG, they are free to do so.

I think the notion that TDG is evil is inseparable from the notion that there's nowhere to turn besides them, which is incorrect. If TDG all of a sudden said that one random part would cost $10mm, do you think that TDG would sell lots of those parts? Obviously not. TDG doesn't do this because they'd lose all of their sales in short order.