M&A Activity
Q: Will potential changes in administration affect M&A plans?
A: Sarah Wynne stated that TransDigm has a few billion dollars in cash and will decide on capital deployment as they close out fiscal '24. Heading into fiscal '25, they may look at M&A opportunities, possibly by the end of the calendar year. "

OEM Contract Negotiations
Q: How are OEM contract renegotiations progressing?
A: Joel Reiss explained that their operating units negotiate contracts individually, with only a couple being corporate-driven, like a Boeing contract expiring at the end of this year. They always have some OEM contracts up for renewal, typically every 3 to 5 years. " "

Aftermarket Growth Outlook
Q: Is aftermarket growth sustainable in fiscal '25?
A: Kevin Stein mentioned they are still evaluating fiscal '25 but expect the market to remain growing and exciting. They will provide more details next quarter but believe they shouldn't have any problem achieving mid-teens growth for the year. " "

EBITDA Guidance
Q: Why does EBITDA guidance imply little Q4 improvement?
A: Kevin Stein said they aim to be conservative. After recent acquisitions, they need to integrate them fully. Additionally, growth is more in defense, where they make less money. They are not predicting a difficult Q4 but are being cautious. "

M&A Pipeline
Q: Are you widening your M&A aperture?
A: Kevin Stein clarified that while they are slightly broadening their focus within aerospace and defense, the vast majority of acquisitions will remain in their traditional component business with aftermarket content. " "

Supply Chain Issues
Q: Any current supply chain concerns?
A: Joel Reiss noted issues are improving but still exist with castings and electronic components. Their decentralized structure allows 50 teams to address supply chains closely, and overall, they continue to see improvements. "

Airline Cost Pressures
Q: Are airlines tightening belts on spending?
A: Kevin Stein observed that their aftermarket products, priced at a couple thousand dollars per part, don't attract strict scrutiny. They haven't seen significant impact from airline cost pressures but remain watchful. "

PMA Competition
Q: Are you seeing increased PMA competition?
A: Kevin Stein stated they monitor PMA activity closely and haven't seen anything that causes concern. Their products are complex with low volumes, not lending themselves to PMA. "

Freight Market Impact
Q: Is freight market affecting aftermarket revenues?
A: Joel Reiss explained that as freight shifts back to belly capacity from dedicated freighters, it impacts lower-margin products like ULDs. While revenue is affected, the EBITDA impact is significantly less. " "

OEM Inventory Levels
Q: Are OEM inventories building up?
A: Joel Reiss mentioned that with 50 operating units, experiences vary. They try to negotiate with OEMs to adjust orders but must ship per delivery dates if changes aren't possible. They work hard to manage inventory fluctuations. "

Hiring Trends
Q: How are hiring and retention progressing?
A: Joel Reiss reported improvements, with turnover returning to 2019 levels and hiring significantly better across most units. Highly skilled engineers remain harder to find, but overall, it's better than a couple of years ago. "

Business Jet Market
Q: What is your outlook on the biz jet market?
A: Joel Reiss noted FAA data shows takeoffs and landings have moderated from 120% to about 103–104% of 2019 levels. They expect this slowing to translate into lower shipments, making it a watch item. "

Debt Restructuring Opportunities
Q: Any plans to reduce interest costs if rates drop?
A: Sarah Wynne said they're 75% hedged and have done significant financing this year. With the next maturity in 2027 and potential breakage fees, they would consider refinancing if rates drop substantially and the math makes sense. "

Interiors Business
Q: When will interior retrofits accelerate?
A: Joel Reiss stated they initially thought it would improve this year but now are unsure. Challenges include not enough aircraft being pulled from service and OEMs not delivering enough new aircraft to allow for retrofits. "

Bookings vs. Shipments
Q: Are bookings ahead of shipments?
A: Joel Reiss confirmed that bookings were ahead of shipments this quarter and year-to-date, including in the freight market, indicating strong demand. " "