Author Topic: TDG - Transdigm  (Read 136913 times)

Spekulatius

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Re: TDG - Transdigm
« Reply #390 on: April 09, 2019, 04:08:46 PM »
If you ask me, the report is damning. The military has a mechanism to single source parts provided that essentially a cost plus method is used and Transdigm appears to abuse it.

Looks like Valeant to me.
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Jurgis

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Re: TDG - Transdigm
« Reply #391 on: April 09, 2019, 04:28:01 PM »
If you ask me, the report is damning. The military has a mechanism to single source parts provided that essentially a cost plus method is used and Transdigm appears to abuse it.

Looks like Valeant to me.

Not to defend Transdigm, but:

- Like you say, military has power and mechanism. So if they want, they should kick Transdigm's butt. If they don't, then they themselves are part of problem (of transferring taxpayers' money to TDG).
- Unlike patients in Valeant's case, I have little sympathy for airlines or aircraft manufacturers or whatever other companies that source replacement parts. They are also big boys and can kick TDG's butt if they want. If they don't, then they themselves are part of problem (of transferring their shareholders' money to TDG).

BTW, I'm not arguing against what khturbo said. It's possible that there are legit reasons to pay TDG through the nose. But if TDG is extorting, then its customers are not as powerless as patients who have to pay pharmas through the nose.
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khturbo

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Re: TDG - Transdigm
« Reply #392 on: April 09, 2019, 05:01:16 PM »
If you ask me, the report is damning. The military has a mechanism to single source parts provided that essentially a cost plus method is used and Transdigm appears to abuse it.

Looks like Valeant to me.

Not to defend Transdigm, but:

- Like you say, military has power and mechanism. So if they want, they should kick Transdigm's butt. If they don't, then they themselves are part of problem (of transferring taxpayers' money to TDG).
- Unlike patients in Valeant's case, I have little sympathy for airlines or aircraft manufacturers or whatever other companies that source replacement parts. They are also big boys and can kick TDG's butt if they want. If they don't, then they themselves are part of problem (of transferring their shareholders' money to TDG).

BTW, I'm not arguing against what khturbo said. It's possible that there are legit reasons to pay TDG through the nose. But if TDG is extorting, then its customers are not as powerless as patients who have to pay pharmas through the nose.

That's exactly right. There are mechanisms to pick other suppliers. Customers aren't powerless, which makes the whole argument that TDG is evil / Valeant incorrect.

@spekulatius - this is a question of scale. There were sales numbers in the report, and you can back into TDG's revenue to DoD is in the range of $100-150mm. If you take the margins down to cost of capital, which would require direct legislation, which itself would be legislation going the other way than recent legislation that just passed, then the loss in EBITDA would be about half of that. TDG's EBITDA is $2bb before the ESL acquisition. This isn't exactly doomsday.

And just to be clear, they don't break any laws. They don't report cost for a specific set of parts, which is within their legal right to do as the laws are currently written. Again, it will take new legislation to change that.

Gregmal

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Re: TDG - Transdigm
« Reply #393 on: April 09, 2019, 05:24:19 PM »
Whenever there is a big, unique case or event, many times the ripple effect is that people end up seeing future things/events/cases in a manner tainted by that event. Whether it be the GFC, or on an individual scale, Valeant, there is always going to be a story that sells, built around something else being "the next (insert GFC, housing bubble, VRX, etc)". But from experience, the next "GFC, VRX" is almost always NEVER the next GFC, VRX.

Spekulatius

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Re: TDG - Transdigm
« Reply #394 on: April 09, 2019, 05:44:12 PM »
Whenever there is a big, unique case or event, many times the ripple effect is that people end up seeing future things/events/cases in a manner tainted by that event. Whether it be the GFC, or on an individual scale, Valeant, there is always going to be a story that sells, built around something else being "the next (insert GFC, housing bubble, VRX, etc)". But from experience, the next "GFC, VRX" is almost always NEVER the next GFC, VRX.

Itís not the same than Valeant, but it rhymes. Heavily regulated  market and protected product, government customer, price gouging, Rollup strategy, highly levered Balance sheet. It doesnt mean that it will blowout, but all the ingredients are there.

I agree the military has power it can exercise. Just from my experience , the defense business is somewhat clubby. I think there is also the revolving door issue where a lot of retirees from the military find a second carrier in the defense sector and they donít want to poison the well...
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Liberty

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Re: TDG - Transdigm
« Reply #395 on: May 07, 2019, 05:36:10 AM »
fiscal Q2:

https://www.transdigm.com/investor-relations/news-releases/news-article/?myartid=2397456

Quote
Net sales of $1,195.9 million, up 28.2% from $933.1 million;
Net income from continuing operations of $202.4 million, up 0.3% from $201.8 million;
Earnings per share from continuing operations of $3.60, down 0.8% from $3.63;
EBITDA As Defined of $571.8 million, up 23.5% from $463.1 million;
Adjusted earnings per share of $4.21, up 11.1% from $3.79; and
Upward revision to fiscal 2019 sales, EBITDA As Defined and adjusted earnings per share guidance.

http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NzA2NTIxfENoaWxkSUQ9NDE5MTc0fFR5cGU9MQ==&t=1
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walkie518

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Re: TDG - Transdigm
« Reply #397 on: May 22, 2019, 04:28:43 PM »
https://www.bloomberg.com/news/articles/2019-05-14/pentagon-contractor-s-9-400-profit-on-half-inch-pin-challenged

http://fortune.com/2019/05/15/transdigm-pentagon-gouging/

https://oversight.house.gov/legislation/hearings/dod-inspector-general-report-on-excess-profits-by-transdigm-group-inc
Stein was a little smug and Howley was arguing a point, Fahey is here and there... he seems to argue that there isn't sufficient regulation to handle

not sure how I feel here... my guess is if Uncle Sam gets a discount, commercial OEMs eat the increase?

Liberty

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Liberty

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