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    TransDigm Group Inc (TDG)

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    Business Description

    TransDigm Group Incorporated (TDG) is a leading global designer, producer, and supplier of highly engineered proprietary aerospace components, which are critical to the operation of nearly all commercial and military aircraft worldwide . The company is organized into three reporting segments: Power & Control, Airframe, and Non-aviation . Approximately 90% of TDG's net sales are generated by proprietary products, with a significant portion of revenue coming from aftermarket sales, which account for about 55% of net sales . The company's business strategy includes a focus on obtaining profitable new business, improving cost structures, and pricing products to reflect their value .

    1. Power & Control - Focuses on systems and components that provide or control power in aircraft, including actuators, ignition systems, and power conditioning devices.
    2. Airframe - Develops components for non-power airframe applications, such as latching devices, cockpit security systems, and interior surfaces.
    3. Non-aviation - Caters to markets outside aviation, offering products like seat belts for ground transportation and actuators for space applications.

    Key Metrics

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    Executive Team

    NamePositionStart DateShort Bio
    Kevin SteinPresident, Chief Executive Officer, and DirectorApril 2018Kevin Stein has been serving as the President, Chief Executive Officer, and Director of TransDigm Group Incorporated since April 2018. He was appointed President in January 2017. Prior to his current role, Mr. Stein served as Chief Operating Officer from January 2017 to March 2018 and as Chief Operating Officer of the Power and Control segment from October 2014 to December 2016. Before joining TransDigm, he was the President of the Structurals Division and Executive Vice President of Precision Castparts Corp. from 2009 to 2014 .
    Michael LismanCo-Chief Operating OfficerMay 2023Michael Lisman was appointed as Co-Chief Operating Officer of TransDigm Group Incorporated in May 2023. Before this role, he served as the Chief Financial Officer from July 2018 to May 2023 and as an Executive Vice President from January 2022 to May 2023. He also held positions such as Vice President of Mergers and Acquisitions and Business Unit Manager for the Air & Fuel Valves business unit at Aero Fluid Products, a wholly-owned subsidiary of TransDigm Inc. Prior to joining TransDigm, Mr. Lisman gained experience in private equity and investment banking roles at Warburg Pincus, The Carlyle Group, and Morgan Stanley .
    Joel ReissCo-Chief Operating OfficerMay 2023Joel Reiss serves as the Co-Chief Operating Officer at TransDigm Group Incorporated. He was appointed to this position in May 2023. Prior to this role, Mr. Reiss served as Executive Vice President from October 2015 to May 2023. He has also held positions as President of Hartwell Corporation from July 2012 to October 2015, President of Skurka Aerospace from July 2010 to July 2012, and Director of Operations of Adams Rite Aerospace from July 2000 to July 2010 .
    Sarah WynneChief Financial OfficerMay 2023Sarah Wynne was appointed as the Chief Financial Officer (CFO) of TransDigm Group Incorporated in May 2023. Prior to her role as CFO, she served as the Chief Accounting Officer from November 2018 to May 2023. Before that, she was the Group Controller from April 2015 to October 2018 and the Controller of the Aero Fluid Products division of AeroControlex Group, Inc., a wholly-owned subsidiary of TransDigm Inc., from October 2009 to March 2015. She has held various other accounting roles within the company .
    Jessica L. WarrenGeneral Counsel, Chief Compliance Officer, and SecretaryFebruary 2023Jessica L. Warren was appointed as General Counsel, Chief Compliance Officer, and Secretary of TransDigm Group Incorporated in February 2023. Prior to this role, she served as Associate General Counsel from December 2018 to February 2023. Before joining TransDigm, Ms. Warren maintained a private legal practice focusing on providing services to technology-driven businesses, including providing counsel to TransDigm on various matters .

    Questions to Ask Management

    1. Given that you're paying higher multiples for acquisitions now than a few years ago, how do you reconcile this with your commitment to disciplined M&A and achieving a 20% IRR on every deal, especially as valuations have increased?

    2. With defense sales being lumpy and difficult to forecast, and the possibility of uneven growth over 2025, how are you adjusting your strategy to manage this volatility and ensure consistent performance?

    3. Considering that freight flights have only recently returned to growth and it's hard to predict when this will translate into revenue growth, what specific measures are you taking to mitigate uncertainty in the freight market and align your operations accordingly?

    4. You've mentioned ample capacity for M&A, including larger deals, to reach your target net leverage ratio; given that, can you provide more clarity on your priorities between pursuing large acquisitions versus returning capital to shareholders through buybacks or dividends?

    5. Your forecasting approach relies on a bottoms-up analysis without imposing top-down assumptions like RPM growth; in light of this, how do you ensure that your operating units' forecasts are aligned with broader market trends and that you're not missing critical macro indicators that could impact your business?

    Share Repurchase Program

    Program DetailsProgram 1
    Approval DateJanuary 27, 2022
    End Date/DurationNo expiration date
    Total additional amount$2,200 million
    Remaining authorization amount$1,288 million as of September 30, 2024
    DetailsReplaced previous $650 million program authorized on November 8, 2017

    Debt Maturity Schedule

    YearAmount Due (in millions)Debt TypeInterest Rate% of Total Debt
    2025$595Short-Term Debt (Trade Receivable Securitization Facility, Term Loans, Finance Leases)Term SOFR + 1.45% 2.4% = (595 / 24,880) * 100
    2027$2,6505.50% Senior Subordinated Notes5.50% 10.6% = (2,650 / 24,880) * 100
    2028$3,971Secured Notes, Tranche I Term Loans6.75%, Term SOFR + 2.75% 16.0% = (3,971 / 24,880) * 100
    2029$4,7004.625% Senior Subordinated Notes, 6.375% Secured Notes, 4.875% Senior Subordinated Notes4.625%, 6.375%, 4.875% 18.9% = (4,700 / 24,880) * 100
    2030$3,1496.875% Secured Notes, Tranche K Term Loans6.875%, Term SOFR + 2.75% 12.7% = (3,149 / 24,880) * 100
    2031$4,6327.125% Secured Notes, Tranche J Term Loans7.125%, Term SOFR + 2.50% 18.6% = (4,632 / 24,880) * 100
    2032$3,7006.625% Secured Notes, Tranche L Term Loans6.625%, Term SOFR + 2.50% 14.9% = (3,700 / 24,880) * 100
    2033$1,5006.00% Secured Notes6.00% 6.0% = (1,500 / 24,880) * 100

    Auditor

    NameStart DateEnd DateReason for Change
    Ernst & Young LLP2004 PresentCurrent auditor

    Latest news

    Recent developments and announcements about TDG.

    Financial Actions

      Dividend Policy

      ·
      Sep 20, 2024, 12:00 AM

      TransDigm Group Announces Special Cash Dividend

      On September 20, 2024, TransDigm Group Incorporated announced that its Board of Directors has authorized and declared a one-time special cash dividend of $75.00 per share on each outstanding share of common stock. Additionally, cash dividend equivalent payments will be made on options granted under its stock incentive plans. The record date for this special dividend is set for October 4, 2024, and the payment date is scheduled for October 18, 2024. This announcement was made alongside the successful completion of incremental debt funding, which includes $1.5 billion of new term loans and $1.5 billion of new Senior Secured Notes .