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TDG · TransDigm Group

24 filings

10-K

TDG 10-K Annual Reports

TransDigm Group - 24 annual reports

Filing record · 2016–202610-K1210-Q338-K234

2025
TransDigm Group Annual Report, Year Ended Sep 30, 2025
TransDigm Group (TDG) reported fiscal 2025 (year ended September 30, 2025) net sales of $8,831 million, up 11.2% from $7,940 million, with organic sales growth of 7.7%. Gross margin expanded to 60.1% from 58.8%, and income from operations rose to $4,165 million (47.2% of sales) from $3,531 million. Net income attributable to TD Group was $2,074 million, and basic and diluted EPS was $32.08 versus $25.62. Growth was driven by defense and commercial aftermarket demand, with Power & Control sales up 15.0% and Airframe up 8.0%. Management also highlights that about 55% of sales come from the aftermarket and that roughly 90% of sales are from proprietary products. The balance sheet and capital structure changed sharply. Total debt rose to about $30.0 billion from $24.9 billion, funding a $90 per share special dividend (about $5.2 billion) paid in September 2025 and $9.6 billion of total dividend and dividend-equivalent payments during the year. Stockholders' deficit widened to $(9.7) billion, and cash fell to $2.8 billion from $6.3 billion. Interest expense rose 22% to $1,572 million, and roughly 75% of gross debt is fixed-rate. Free cash flow was strong, with operating cash flow of $2,038 million less capex of $222 million, and the company guided fiscal 2026 capex to 2.5%-3.25% of sales. Subsequent to year-end, TransDigm closed the $757 million Simmonds Precision acquisition in October 2025, and the board authorized an additional $5 billion of share repurchases in November 2025. For investors, the key trade-off is high financial leverage and shareholder-return policy against operating strength. Management emphasizes its value-driven strategy and selective acquisitions, while the risk factors flag customer concentration (top ten customers about 40% of sales), defense budget exposure, fixed-price contract risk, and significant goodwill and intangibles ($14.1 billion combined, about 61% of total assets). Investors should weigh these against the company's sustained margin expansion and cash generation, with credit and covenant headroom becoming a more important consideration after the recapitalization-style dividends.
Nov 12, 2025
2024
TransDigm Group Annual Report, Year Ended Sep 30, 2024
TransDigm Group (TDG) reported fiscal 2024 (year ended September 30, 2024) net sales of $7,940 million, up 20.6% from $6,585 million, with organic sales growth of 16.2% led by defense (+18.9%), commercial OEM (+20.4%) and commercial aftermarket (+12.0%). Gross margin expanded to 58.8% from 58.3%, income from operations rose to $3,531 million (44.5% of sales), and net income attributable to TD Group increased 32.0% to $1,714 million, or $25.62 per share on a two-class basis. EBITDA As Defined reached $4,173 million (52.6% of sales), up 22.9%, supported by both organic growth and $288 million of acquisition sales from Raptor Scientific, CPI's Electron Device Business, SEI, FPT and Calspan. The defining feature of the year is the balance sheet. TransDigm raised roughly $21 billion in debt financing during fiscal 2024 and paid $110.00 per share in special dividends ($35 in November 2023 and $75 in September 2024, with the latter paid in October 2024 for about $4.3 billion including dividend equivalents). Total debt rose to approximately $24.9 billion, against stockholders' deficit of $(6.3) billion and cash of $6.3 billion at year end. Pro forma for the October dividend payment, cash liquidity falls to about $2.9 billion. Management's stated target is at least 75% fixed-rate debt, and roughly 77% of gross debt was fixed at year end. The company also acquired about $2.3 billion of businesses during the year and recorded goodwill of $10.4 billion and intangibles of $3.4 billion, which together represent roughly 54% of total assets. For investors, the results show strong operating momentum in aftermarket-driven aerospace and defense demand, but the company is increasingly levered and shareholder-return oriented, with no regular dividend. Key watch items include interest expense of $1,286 million (up 10.5%), exposure to variable-rate debt, reliance on the top ten customers (about 42% of sales), and the material impairment risk embedded in the large goodwill balance.
Nov 7, 2024
2023
TransDigm Group Annual Report, Year Ended Sep 30, 2023
TransDigm Group's fiscal 2023 (year ended September 30, 2023) was a strong year driven by the commercial aerospace recovery and continued defense strength. Net sales rose 21.2% to $6,585 million, with organic sales up 18.1%, and gross margin expanded to 58.3% from 57.1%, aided by the aftermarket mix and operating leverage. Income from operations increased 32% to $2,923 million, and net income attributable to TD Group grew 49.9% to $1,298 million (EPS $22.03). EBITDA As Defined, the metric management uses to judge segments, reached $3,395 million, or 51.6% of sales. Commercial aftermarket sales, which carry higher margins and are more stable, grew strongly, and roughly 56% of sales came from the aftermarket. The balance sheet remains highly leveraged by design. Total debt was about $19.75 billion, roughly 111% of total book capitalization, and TD Group carries a stockholders' deficit of $1.98 billion. Management used the year to refinance over $9.8 billion of debt, extending maturities to 2026-2030 and moving the term loans from LIBOR to Term SOFR. About 90% of debt is fixed-rate after hedging, and the company had $4.3 billion of cash liquidity at year-end. Interest expense rose 8.2% to $1,164 million, and the weighted average cash interest rate increased to 6.2% from 5.3%, so rising rates are a real cost headwind. Capital returns and M&A are significant for shareholders. The Board declared a $35.00 per share special dividend on November 9, 2023, payable November 27, 2023, costing about $2,020 million including dividend equivalents, funded from cash on hand. No buybacks were made in fiscal 2023, leaving $1,288 million authorized. The company acquired Calspan for $729 million and announced a $1,385 million agreement to buy the Electron Device Business of CPI, expected to close by the end of fiscal Q3 2024. Key risks include reliance on defense budgets (39% of sales), a top-ten customer concentration of 41%, supply chain constraints, the high debt load, a $21 million DOD OIG voluntary refund request, and the goodwill and intangibles base of about $11.7 billion, which is roughly 59% of total assets.
Nov 9, 2023
2022
TransDigm Group Annual Report, Year Ended Sep 30, 2022
TransDigm Group (TDG) reported fiscal 2022 (year ended September 30, 2022) net sales of $5,429 million, up 13.2% from $4,798 million, driven by a strong recovery in commercial aftermarket sales (organic commercial aftermarket up 44.8%) and commercial OEM sales (up 23.8%), partially offset by a 2.2% decline in defense sales. Gross margin expanded to 57.1% from 52.4%, income from operations rose to $2,215 million from $1,691 million, and net income attributable to TD Group increased 27.4% to $866 million, or $13.40 per share on an earnings-per-share basis after dividend equivalent adjustments. EBITDA As Defined, the company's primary performance measure, reached $2,646 million (48.7% of net sales) versus $2,189 million (45.6%) a year earlier. The company returned roughly $2 billion to shareholders during the year, consisting of an $18.50 per share special dividend paid in August 2022 (about $1,045 million, or $1,091 million including dividend equivalents) and approximately $912 million of share repurchases at an average price of $612.13. Cash fell to $3,001 million from $4,787 million, and the balance sheet remains highly leveraged, with total debt of roughly $19.8 billion against a stockholders' deficit of $3,773 million. Total indebtedness represented about 123.5% of total book capitalization, and roughly 85% of debt was fixed rate after swaps and caps. Interest expense net was $1,076 million, and management reported a weighted average cash interest rate of 5.3%. Key risks highlighted include the continued pace of commercial aerospace recovery (RPMs and Boeing/Airbus production rates remain below pre-pandemic levels), supply chain shortages and inflation for electronic parts, dependence on the U.S. defense budget and government audit exposure (including a $20.8 million voluntary refund request from a DOD OIG audit), ongoing pricing pressure from fixed-price contracts, leverage and covenant constraints, and reliance on acquisitions for growth, highlighted by the $359 million DART Aerospace acquisition completed in May 2022.
Nov 10, 2022
2021-A
TransDigm Group Annual Report (Amendment), Year Ended Sep 30, 2021
TransDigm Group Inc.'s (TDG) 2021 Form 10-K/A filing primarily details the company's directors, executive officers, and their compensation. The report highlights the structure of the board and the rigorous performance-based compensation philosophy for its executives, emphasizing long-term equity incentives and alignment with stockholder interests. The company's compensation strategy focuses on performance-based stock options with stringent vesting criteria, aiming to foster long-term value creation. This approach is designed to incentivize management to achieve growth rates comparable to or exceeding top-performing private equity funds. Notably, the company has addressed prior shareholder concerns regarding overlapping performance metrics in compensation plans and has refined its approach to executive and director compensation to ensure transparency and alignment with shareholder expectations.
Jan 28, 2022
2021
TransDigm Group Annual Report, Year Ended Sep 30, 2021
TransDigm Group's fiscal 2021 10-K (year ended September 30, 2021) shows a company still absorbing the COVID-19 downturn in commercial aerospace, though the trough appears to have passed. Net sales fell 6.0% to $4,798 million from $5,103 million, driven by a 7.4% decline in organic sales, mainly commercial OEM and commercial aftermarket. Defense grew, rising to roughly 50% of sales. Gross margin improved 0.5 points to 52.4% on cost mitigation, and net income attributable to TD Group was $680 million, down 2.7%. EBITDA As Defined declined 3.9% to $2,189 million, and its margin rose to 45.6%. Cash from operations was $913 million, down from $1,213 million, mainly because of working capital changes. The balance sheet remains highly leveraged. Total debt is about $20 billion, equal to 117.1% of total book capitalization, and TD Group carries a stockholders' deficit of $2.9 billion. Management points to $5.3 billion of cash liquidity, including $4.8 billion of cash and $529 million of revolver availability. About 86% of debt is fixed rate, and the company refinanced several high-coupon notes, which is expected to lower annual interest by about $35 million. Management expects COVID-19 to keep weighing on sales, net income and EBITDA As Defined into fiscal 2022, with recovery timing uncertain. The company also continued its acquisition strategy, most notably the $945 million Cobham Aero Connectivity purchase, and made several divestitures, including ScioTeq/TREALITY and TAC. No regular dividend is paid, though a $32.50 special dividend was paid in fiscal 2020. Investors should weigh the strong aftermarket franchise, high margins and defense exposure against heavy leverage, customer concentration and the uneven commercial recovery.
Nov 16, 2021
2020
TransDigm Group Annual Report, Year Ended Sep 30, 2020
TransDigm Group's fiscal 2020 10-K (year ended September 30, 2020) shows a company whose commercial aerospace exposure was hit hard by COVID-19, while its defense business and aftermarket-heavy model provided partial offset. Net sales fell 2.3% to $5,103 million from $5,223 million, with organic sales down 13.8% driven by a 25.7% decline in commercial aftermarket and a 24.5% decline in commercial OEM. Defense sales rose, and Esterline's acquisition contributed $699 million of acquisition sales. Gross margin compressed to 51.9% from 53.8%, and net income attributable to TD Group fell 21.5% to $699 million. EBITDA As Defined declined 6.2% to $2,278 million (total company, per the reconciliation), and management expects COVID-19 to weigh on sales and EBITDA into fiscal 2021. Balance sheet leverage is the central investor issue. Total debt is about $20.0 billion, equal to 124.8% of total book capitalization, and the company has a stockholders' deficit of $3,972 million. Management raised roughly $3.1 billion of net new borrowings in fiscal 2020 as a precautionary liquidity step, and cash rose to $4,717 million, giving cash liquidity of $5,238 million including revolver availability. Free cash flow was healthy at about $1,108 million (operating cash flow of $1,213 million less capex of $105 million), supported by a $352 million working capital release from receivables. Interest expense rose 19.8% to $1,029 million, and the company paid $1.9 billion in special dividends and dividend equivalents, with a $32.50 per-share special dividend in December 2019. Operationally, the company retains strong pricing power and proprietary positioning: about 90% of sales are proprietary, about 80% come from sole-source products, and about 49% come from aftermarket sales. Defense rose to about 43% of sales, which the company views as a temporary mix shift. Investors should weigh the strength of the aftermarket franchise and cash generation against heavy leverage, a large goodwill and intangibles base ($7.9 billion goodwill and $2.6 billion intangibles), continued commercial aerospace uncertainty, and ongoing U.S. government audit and pricing scrutiny.
Nov 12, 2020
2019
TransDigm Group Annual Report, Year Ended Sep 30, 2019
TransDigm Group (TDG) closed fiscal 2019 (ended September 30, 2019) with net sales of $5,223.2 million, up 37.0% year over year, driven by $1,010.5 million of acquisition sales (chiefly the $3.9 billion Esterline acquisition closed March 14, 2019) and 10.5% organic growth. Gross margin fell to 53.8% from 57.1% due to acquisition inventory step-up charges ($76.9 million) and the mix effect of Esterline. Net income attributable to TD Group declined 7.0% to $889.8 million, and diluted EPS from continuing operations dropped to $12.94 from $16.28, largely because fiscal 2018 benefited from a $176.4 million Tax Cuts and Jobs Act remeasurement gain. Adjusted EBITDA As Defined rose 28.9% to $2,418.8 million, and the company reports a total-debt-to-EBITDA leverage ratio of about 7.0x. The balance sheet is highly leveraged. Total debt reached $16.9 billion, 120.7% of total book capitalization, and TD Group carries a stockholders' deficit of $2.9 billion. The company paid $30.00 per share in special dividends (roughly $1.7 billion in cash) during fiscal 2019, funded partly with new debt, including $4.0 billion of 6.25% secured notes and $550 million of 7.50% notes. Subsequent to year-end, TransDigm agreed to issue $2.65 billion of 5.50% senior subordinated notes due 2027 to refinance $1.15 billion of 6.00% notes due 2022, and it expects to close the sale of Souriau-Sunbank to Eaton for about $920 million in the first quarter of fiscal 2020. The EIT divestiture to KPS Capital for about $190 million closed in September 2019. Backlog rose to $3.44 billion from $2.03 billion, and the company reports an 83% fixed-rate debt mix. Key risks flagged in the filing include heavy reliance on the commercial aftermarket and aircraft flight hours, concentration in U.S. defense spending (about 37% of sales), The Boeing Company (about 11% of sales), a securities class action tied to U.S. government pricing practices, an ongoing DoD Inspector General audit and a House Oversight inquiry, and integration risk from Esterline. The filing also discloses a fire at the Niort, France facility in August 2019 that suspended operations and is expected to take up to 18 months to rebuild. Management's stated capital allocation priorities are internal capex, acquisitions, special dividends or buybacks, and debt reduction, with a $650 million buyback authorization still unused.
Nov 19, 2019
2018
TransDigm Group Annual Report, Year Ended Sep 30, 2018
TransDigm Group (TDG) reported fiscal 2018 (year ended September 30, 2018) net sales of $3,811.1 million, up 8.8% from $3,504.3 million, with organic growth of 5.5%. Gross profit rose to $2,177.5 million (57.1% of sales, up 0.5 points), and income from operations reached $1,654.9 million (43.4% of sales). Net income more than doubled in relative terms to $957.1 million, but was flattered by a one-time $146.4 million net tax benefit from the Tax Cuts and Jobs Act, which drove the effective tax rate down to about 2.4%. Diluted EPS was $16.20 versus $7.88 a year earlier. Growth was led by commercial aftermarket sales (up 9.0% organically) and defense sales (up 5.3%), and about 60% of net sales came from aftermarket revenue. The balance sheet is highly leveraged. Total indebtedness was about $12.9 billion, or 116.3% of total book capitalization, and the stockholders' deficit was $1.8 billion. The debt leverage ratio was about 6.9x EBITDA As Defined. Fiscal 2018 included about $1.1 billion in net new borrowings and $1.0 billion of acquisitions (Kirkhill, Extant, Skandia), and cash rose to $2.07 billion. Subsequent to year-end, TransDigm agreed on October 9, 2018 to acquire Esterline Technologies for about $4 billion ($122.50 per share in cash), financed mainly with cash on hand and a commitment for a senior secured term facility of up to $3.7 billion. The deal is expected to close in 2019, subject to Esterline shareholder approval and regulatory clearances. Investors should weigh the strong cash generation and aftermarket franchise against the heavy debt load, the pending transaction's integration risk and added leverage, and the ongoing securities class action tied to U.S. government sales practices. No dividends were declared in fiscal 2018, and no share repurchases were made under the $650 million program. Management's stated capital allocation priorities remain capital spending, acquisitions, special dividends or buybacks, and debt prepayment, with special dividends permitted subject to debt covenants.
Nov 9, 2018
2017
TransDigm Group Annual Report, Year Ended Sep 30, 2017
TransDigm Group (TDG) reported fiscal 2017 (year ended September 30, 2017) net sales of $3,504.3 million, up 10.5% year over year, with organic growth of 2.4% and acquisitions contributing 8.1%. Gross margin expanded to 56.6% from 54.5%, and income from operations rose 16.7% to $1,479.8 million. Net income was $596.9 million, but EPS fell to $7.88 from $10.39 because of a $31.7 million loss from discontinued operations (the Schroth business, divested after a Department of Justice settlement tied to its acquisition) and $159.3 million of dividend equivalent payments allocated to participating securities. EBITDA As Defined reached $1,710.6 million, a 14.4% increase. The central investor issue is leverage. TransDigm funded $2.58 billion of special dividends ($24.00 per share in October 2016 and $22.00 per share in August 2017), along with about $390 million of share repurchases, largely through new term loans and notes. Total indebtedness reached roughly $11.8 billion, or 133.5% of total book capitalization, and the company reported a stockholders' deficit of $2.95 billion. Its debt leverage ratio was about 6.9x EBITDA As Defined at year-end. Interest expense rose 24.5% to $602.6 million, and all $7.0 billion of term loans carry floating rates, partly hedged through swaps and caps. Cash fell to $650.6 million from $1,587.0 million. The business is supported by a strong aftermarket franchise: about 55% of fiscal 2017 sales came from aftermarket, roughly 90% of sales came from proprietary products, and about 80% came from sole-source products. Backlog rose to $1,669 million from $1,554 million, largely due to acquisitions. Management has signaled continued capital returns, including a new $650 million buyback authorization approved in November 2017. Investors should weigh that shareholder-friendly capital deployment against a highly levered balance sheet, dependence on the U.S. defense budget and two large customers (Airbus 13% and Boeing 11% of sales), and continued acquisition-driven growth.
Nov 13, 2017
2016-A
TransDigm Group Annual Report (Amendment), Year Ended Sep 30, 2016
TransDigm Group Incorporated (TDG) filed an amendment (10-K/A) to its 2016 Annual Report on November 17, 2016. This amendment's primary purpose was to include an inadvertently omitted Exhibit 23.1, the Consent of Independent Registered Public Accounting Firm from Ernst & Young LLP. It's important for investors to note that this amendment does not alter the financial statements or other disclosures made in the original Form 10-K filed on November 15, 2016. The company confirmed its status as a well-known seasoned issuer and a large accelerated filer, indicating its established presence and regulatory compliance. The aggregate market value of its non-affiliate stock as of March 31, 2016, was substantial at over $10.8 billion, with approximately 53.3 million shares outstanding as of early November 2016. Investors should refer to the original Form 10-K filing for detailed financial performance and strategic information.
Nov 18, 2016
2016
TransDigm Group Annual Report, Year Ended Sep 30, 2016
TransDigm Group (TDG) closed fiscal 2016 (year ended September 30, 2016) with net sales of $3,171.4 million, up 17.1% year over year, and net income of $586.4 million, up 31.1%. Growth was split between organic sales (+2.0%, to $2,762.2 million) and acquisitions (Breeze-Eastern, Data Device Corporation and Tactair, contributing $409.2 million). Gross margin expanded to 54.5% from 53.6%, and EBITDA As Defined rose 21.4% to $1,495.2 million. Aftermarket revenue is roughly 54% of sales, and the company estimates its products are installed on about 95,000 aircraft, which supports the durability of its earnings. The balance sheet and capital allocation are the central investor concerns. Total indebtedness reached about $10.2 billion, 106.8% of total book capitalization, and stockholders' equity is negative at -$651.5 million. Debt rose by roughly $1.8 billion in fiscal 2016 to fund acquisitions and a prior-year special dividend. The company's debt-to-EBITDA leverage ratio was about 6.8x at year-end. Subsequent to year-end, TransDigm added $1.15 billion of Tranche F term loans to fund a tender for its 7.50% 2021 notes and a $24.00 per share special dividend, with a total cash payment of about $1.4 billion in the first quarter of fiscal 2017. Management says it does not plan regular dividends, so future shareholder returns will depend on special distributions and debt capacity. Key risks are concentration and cyclicality. The top ten customers represented about 45% of sales, with Airbus at about 13% and Boeing at about 12%. Defense sales (about 30%) depend on U.S. budget trends, and most U.S. government contracts can be terminated for convenience. The company's floating-rate term loans total about $5.2 billion, and a 1-point rate increase would raise annual interest costs by about $52 million. Goodwill and intangibles together make up roughly 69% of total assets, which creates impairment risk if performance weakens.
Nov 15, 2016
2015
TransDigm Group Annual Report, Year Ended Sep 30, 2015
TransDigm Group (TDG) reported fiscal 2015 (year ended September 30, 2015) net sales of $2,707.1 million, up 14.1% from $2,372.9 million, with organic growth of 3.3% and the balance from acquisitions, primarily Telair Cargo Group, PneuDraulics, Pexco Aerospace and Adams Rite Aerospace GmbH. Gross margin expanded slightly to 53.6%, income from operations rose 15.8% to $1,074.0 million, and net income increased 45.7% to $447.2 million, or $7.84 per share. Non-GAAP EBITDA As Defined reached $1,233.7 million, and the company's sales mix was roughly 54% aftermarket, with about 80% of sales from sole-source products. The central investor issue is leverage. Total indebtedness was approximately $8,427 million, or about 114% of book capitalization, which reflects a stockholders' deficit of $(1,038) million. The debt-to-EBITDA ratio stood at roughly 6.8x at year end. Fiscal 2015 interest expense rose to $418.8 million, and the company spent about $1.62 billion on acquisitions, funded largely by $1.0 billion of new Tranche E term loans, a $450 million 6.50% 2025 senior subordinated note issue, and cash on hand. No regular dividend is planned, and no special dividend was declared in fiscal 2015, after $25.00 per share in June 2014. The company holds $714 million of cash and $534 million of revolver availability. Risk concentration is also significant. Boeing and Airbus accounted for about 12% and 11% of sales, the top ten customers for about 46%, and goodwill plus intangibles together represent roughly 74% of total assets. Backlog grew to $1,428 million from $1,195 million, mostly from acquisitions. Investors should weigh strong margins and cash generation against a highly levered balance sheet, a continued acquisition-driven growth model, and exposure to commercial aerospace cycles and U.S. defense budgets.
Nov 13, 2015
2014
TransDigm Group Annual Report, Year Ended Sep 30, 2014
TransDigm Group (TDG) closed fiscal 2014 (year ended September 30, 2014) with net sales of $2,372.9 million, up 23.3% from $1,924.4 million, of which roughly $292.5 million came from acquisitions (Airborne Global and Elektro-Metall Export) and the remainder from organic growth of about 8.1%. Gross margin fell to 53.4% from 54.5%, largely because lower-margin acquired sales diluted the mix, while income from operations rose 23.8% to $927.8 million. Net income was $306.9 million, but it included $131.6 million of refinancing costs tied to the June 2014 redemption of the 7.75% 2018 Notes, and diluted EPS rose to $3.16 from $2.39 after participating-security dividend equivalents were deducted. The central investor issue is leverage. In June 2014 the company issued $2.35 billion of 6.0% (2022) and 6.5% (2024) senior subordinated notes and $825 million of Tranche D term loans to fund a $25.00 per share special dividend, following a $22.00 special dividend in July 2013. Total indebtedness reached about $7.47 billion, roughly 126% of total capitalization, and stockholders' deficit widened to $(1.56) billion. Management puts the debt-to-EBITDA As Defined ratio at about 7.0x, at the high end of its historical 3.5x to 7.0x range. Most of the debt is floating-rate, though swaps cover a large share of the term loan. Interest expense rose 28% to $347.7 million. Operationally, the business remains highly aftermarket-driven, with about 55% of sales from aftermarket and about 90% from proprietary products, and the top ten customers contributing about 43% of sales. Boeing alone accounted for about 13%. Backlog reached $1,195 million, up from $1,081 million, and the company repurchased $159.9 million of stock in fiscal 2014 under a new $250 million authorization announced after year end. Management expects fiscal 2015 capital expenditures of $60 to $65 million and says the Airborne and EME acquisitions, about 6% of assets and sales, were excluded from the internal control assessment.
Nov 14, 2014
2013
TransDigm Group Annual Report, Year Ended Sep 30, 2013
TransDigm Group (TDG) reported fiscal 2013 (year ended September 30, 2013) net sales of $1,924.4 million, up 13.2% from $1,700.2 million, with organic sales growth of 3.5% and the remainder from acquisitions (Whippany Actuation, Arkwin, Aerosonic in fiscal 2013 and AmSafe, Harco, Aero-Instruments in fiscal 2012). Gross margin declined to 54.5% from 55.6%, and income from continuing operations fell 6.8% to $302.8 million. Diluted EPS dropped to $2.39 from $5.97, but this comparison is distorted by the $3.11 per share dividend equivalent charge against the numerator and the prior-year level; net income was $302.8 million. Selling and administrative expenses rose 26.2%, driven by acquisition costs and roughly $21 million of accelerated stock compensation from the June 2013 market sweep provision. The most important development for investors is the capital structure shift. TransDigm paid two special cash dividends totaling $34.85 per share ($664.3 million in October 2012 and $1,155.8 million in July 2013, about $1.99 billion in total dividend payments), funded by new debt. Total indebtedness rose to approximately $5.73 billion from $3.62 billion, and stockholders' equity turned to a deficit of $(336.4) million. Management reports a debt leverage ratio of about 6.4x EBITDA As Defined ($900.3 million), and interest expense rose 27.7% to $270.7 million. Roughly 106% of total capitalization is now debt, and the company states it does not plan regular dividends, so future special dividends remain at board discretion and subject to debt covenants. Offsetting these concerns, the business profile remains strong: about 53% of sales come from aftermarket, roughly 90% from proprietary products, and about three-quarters from sole-source products. Backlog grew to $1,081 million from $833 million, and management expects fiscal 2014 capital expenditures of $40-45 million. Investors should weigh the attractive aftermarket economics against the high leverage, floating-rate exposure (partly hedged), and dependence on acquisitions for growth.
Nov 15, 2013
2012
TransDigm Group Annual Report, Year Ended Sep 30, 2012
TransDigm Group (NYSE: TDG) reported fiscal 2012 (year ended September 30, 2012) record results, with net sales up 41% to $1,700.2 million, driven by about $352 million of acquisition sales (AmSafe, Harco, Aero-Instruments) and 11.8% organic growth. Gross margin expanded to 55.6% from 54.8%, and income from continuing operations more than doubled to $325.0 million, or $5.97 per share. EBITDA As Defined rose to $809.0 million from $589.9 million, and operating cash flow reached $413.9 million. Backlog grew to $833 million from $737 million. The balance sheet is highly leveraged. Total indebtedness was $3,619.1 million, about 74.8% of total capitalization, and the company cites a debt leverage ratio of roughly 4.5x. Most of the debt is floating-rate term loans, partly hedged by $353 million of forward-starting swaps fixing rates at 5.17%. Goodwill and intangibles together represent about 77% of total assets, which raises impairment risk if returns fall short of expectations. Subsequent to year-end, TransDigm amended its credit facility to add a $150 million term loan and issued $550 million of 5 1/2% senior subordinated notes due 2020. Those proceeds, plus existing cash, fund a special cash dividend of $12.85 per share (about $663.5 million, paid November 2012), with dividend equivalent payments of about $36.0 million. The company also agreed to buy the Goodrich Pump & Engine Control Systems business for about $236 million. Investors should weigh strong growth and margins against elevated leverage, customer concentration (Boeing 13% of sales, top ten customers 43%), and dependence on acquisitions for growth.
Nov 16, 2012
2011
TransDigm Group Annual Report, Year Ended Sep 30, 2011
TransDigm Group (NYSE: TDG) reported fiscal 2011 (year ended September 30, 2011) net sales of $1,206.0 million, up 45.7% from $827.7 million, with net income of $172.1 million (EPS $3.17, including $0.37 from discontinued operations). Roughly $378 million of growth came from acquisitions: $276.2 million from acquired businesses (McKechnie Aerospace, Talley Actuation, Schneller Holdings in fiscal 2011, plus Dukes and Semco in fiscal 2010) and about $102 million, or 12.3%, from organic growth. Gross margin fell to 54.8% from 57.2%, largely because acquisitions carried purchase accounting and integration costs and diluted margins by roughly 4 percentage points. Commercial aftermarket sales rose 22.1% organically, and commercial OEM sales rose 12.0%. Management says about 56% of sales came from aftermarket and that over 90% of sales came from proprietary products. The balance sheet changed substantially. Total assets rose to $4.51 billion from $2.68 billion, driven by goodwill of $2.60 billion and the McKechnie acquisition, which cost about $1.27 billion. Total debt reached $3.14 billion, about 79.5% of total capitalization, and the debt-to-EBITDA-As-Defined leverage ratio was about 5.3x. In December 2010 the company refinanced its debt with $1.6 billion of 7 3/4% senior subordinated notes due 2018 and a $1.55 billion term loan. Interest expense rose 65% to $185.3 million, and a $72.5 million refinancing charge reduced pre-tax income. Operating cash flow was $260.6 million. Cash rose to $376.2 million, and $237 million remained available on the revolver. Management expects fiscal 2012 capital expenditures of $25 to $30 million. The key investor considerations are the heavy leverage, the reliance on acquisitions for growth (with a $737 million backlog and an $84 million Harco Laboratories acquisition pending), exposure to defense budgets and airline cycles, and the concentration of sales with Boeing (about 14%). The company also disclosed that it excluded McKechnie Aerospace from its internal control assessment and is still integrating its systems. A new $100 million share repurchase authorization was announced, but no shares had been bought as of year-end.
Nov 18, 2011
2010-A
TransDigm Group Annual Report (Amendment), Year Ended Sep 30, 2010
This filing represents an amendment (10-K/A) to TransDigm Group Incorporated's annual report for the fiscal year ended September 30, 2010. The primary purpose of this amendment is to modify the exhibit list, specifically adding an exhibit reference. It does not alter any other financial or operational disclosures from the original Form 10-K filed on November 15, 2010. Investors should refer to the original filing for comprehensive financial and operational details. As this is an amendment focused solely on exhibits, it provides limited new insights into the company's performance or strategic direction. However, it confirms the company's status as a large accelerated filer and its active compliance with SEC filing requirements. The listed exhibits primarily relate to corporate structure, agreements, and various debt instruments, including significant supplemental indentures related to their credit facility, reflecting the company's capital structure and financing activities around that period.
Nov 19, 2010
2010
TransDigm Group Annual Report, Year Ended Sep 30, 2010
TransDigm Group (TDG) closed fiscal 2010 (ended September 30, 2010) with net sales of $827.7 million, up 8.7% from $761.6 million, and net income of $163.4 million, roughly flat versus $162.9 million a year earlier. Gross margin expanded to 57.2% from 56.4%, and operating income rose 8.2% to $363.1 million. Acquisitions (Dukes Aerospace, Semco, and prior deals) contributed $73.8 million of sales, while organic sales declined 1.0%, driven by a $18.7 million drop in business-jet OEM sales partly offset by a return to growth in commercial aftermarket and defense. Interest expense rose 33% to $112.2 million following the October 2009 issuance of $425 million of 7 3/4% senior subordinated notes, which funded a $7.65 per share special dividend (about $405 million including dividend equivalents). The balance sheet is considerably more leveraged. Total debt reached $1.77 billion, about 75% of total capitalization, and stockholders' equity fell to $593 million from $819 million because of the special dividend. Management reports a debt leverage ratio of about 4.3x. Cash flow from operations was $197.3 million, and capital expenditures were $12.9 million. Goodwill and intangibles total roughly $1.97 billion, about 74% of total assets, which creates impairment risk if returns fall short. The most consequential subsequent event is the September 25, 2010 agreement to acquire McKechnie Aerospace for about $1,265 million in cash on a cash-free, debt-free basis. The company expects to add about $1.3 billion of debt, pushing pro forma leverage to roughly 84% of capitalization. Closing is subject to regulatory approvals and was expected before calendar year-end 2010. Investors should weigh the growth and aftermarket-mix benefits of this deal against the step-up in leverage and integration risk.
Nov 15, 2010
2009-A
TransDigm Group Annual Report (Amendment), Year Ended Sep 30, 2009
TransDigm Group Inc. (TDG) filed this Form 10-K/A (Amendment No. 1) for fiscal year ended September 30, 2009, on February 10, 2010, to restate its basic and diluted earnings per share (EPS) and weighted-average share counts. The restatement was driven by a change from the treasury stock method to the two-class method, under which vested stock options with non-forfeitable dividend equivalent rights are treated as participating securities. The restatement does not change reported net income, net sales, or the balance sheet. It lowers restated diluted EPS for fiscal 2009 to $3.10 from $3.23 as originally reported, with the denominator rising to 52.5 million shares from 50.5 million. Management also concluded that internal control over financial reporting was not effective as of September 30, 2009, because of a material weakness in applying the two-class method. The company says that weakness has since been remediated. Operationally, the fiscal 2009 results were solid. Net sales rose 6.7% to $761.6 million, gross profit reached $429.3 million (a 56.4% margin), operating income grew 12.1% to $335.4 million, and net income increased 22.4% to $162.9 million. Growth came largely from acquisitions, including Acme Aerospace, Aircraft Parts Corporation, CEF Industries, and the Woodward HRT and Unison product lines. EBITDA As Defined, the company's covenant-based non-GAAP measure, was $374.7 million. Operating cash flow was $197.1 million. Leverage remains high: total debt was $1.357 billion against $819 million of stockholders' equity, and the consolidated leverage ratio was approximately 3.5x EBITDA As Defined. For investors, the key points are the solid earnings momentum and the restated per-share figures, which are lower but do not affect cash flow or the underlying business. The material weakness disclosure is a governance concern worth monitoring. Subsequent events are also important: in October 2009 the company issued $425 million of additional 7 3/4% senior subordinated notes and paid a special dividend of $7.65 per share (about $374.6 million), plus roughly $30.3 million in dividend equivalent payments to option holders. That recapitalization increases leverage and is a central consideration for equity holders.
Feb 10, 2010
2009
TransDigm Group Annual Report, Year Ended Sep 30, 2009
TransDigm Group (TDG) closed fiscal 2009 (year ended September 30, 2009) with net sales of $761.6 million, up 6.7% from $713.7 million, and net income of $162.9 million, up 22.4%. Organic sales declined 2.4%: commercial OEM sales fell on business jet production cuts and a Boeing strike, and commercial aftermarket dropped, but defense sales rose $37.9 million. Acquisitions (Aircraft Parts Corporation, Acme Aerospace, and the Woodward HRT product line) added $64.7 million of sales. Operating income rose 12.1% to $335.4 million, and EBITDA As Defined reached $374.7 million, or 49.2% of sales. Gross margin improved to roughly 56.4% from 54.1%, driven by proprietary product strength and productivity gains. The balance sheet is highly leveraged. Total debt was about $1.36 billion, roughly 62% of total capitalization. Subsequent to year-end, in October 2009, TransDigm issued $425 million of new 7 3/4% senior subordinated notes and used the proceeds, along with other funds, to pay a $7.65 per share special dividend (about $375 million) and about $30 million in option dividend equivalents. On a pro forma basis, debt represents about 81% of capitalization. Management expects the business to generate sufficient cash to fund operations through at least fiscal 2010, but leverage and floating-rate exposure on the $780 million term loan are significant considerations for equity and debt holders. Key risks include concentration in aerospace end markets (about 65% commercial, 32% defense), with the top two customers, Boeing and Honeywell, accounting for about 22% of sales. The company also faces a DOD Inspector General pricing review covering five subsidiaries, which recommended a voluntary refund of about $2.6 million, and reliance on acquisitions for growth. The company reported a backlog of $402 million, down from $418 million, and management expects military sales to be flat in 2010.
Nov 24, 2009
2008
TransDigm Group Annual Report, Year Ended Sep 30, 2008
TransDigm Group (TDG) closed fiscal 2008 (year ended September 30, 2008) with net sales of $713.7 million, up 20.4% from $592.8 million, and net income of $133.1 million, up 50.2%. Growth was a mix of organic (about 8.8% excluding acquisitions) and acquired sales from CEF, ATI, and Bruce Industries. Operating income rose 28% to $299.3 million, and EBITDA As Defined reached $333.1 million, or 46.7% of sales. Diluted EPS was $2.65, versus $1.83 in fiscal 2007. Roughly 60% of sales came from aftermarket, about 90% from proprietary products, and about 75% from sole-source positions, which supports the company's high-margin, recurring revenue profile. The balance sheet is highly leveraged. Total debt was about $1,357 million, roughly 67.5% of total capitalization, with $780 million of floating-rate term loans and $575 million of 7 3/4% senior subordinated notes due 2014. Interest rate swaps cover $450 million of the term loans. Operating cash flow of $189.6 million comfortably covered capex of $10.9 million and interest expense of $92.7 million, and cash rose to $159.1 million. Goodwill and intangibles together account for roughly 76% of total assets, which creates impairment risk. The company also disclosed a $50 million buyback authorization in October 2008 and a pending DOD Inspector General pricing review. The outlook is more cautious. Management expects 2009 commercial OEM production may peak and decline, RPMs may be flat to modestly negative, and a Boeing strike will cost two to three months of fiscal 2009 commercial OEM output. Defense demand is expected to grow modestly. Investors should weigh strong margins and cash generation against heavy debt, customer concentration (Boeing about 14% and Honeywell about 10% of sales), and cyclical exposure to airline activity.
Nov 25, 2008
2007
TransDigm Group Annual Report, Year Ended Sep 30, 2007
TransDigm Group (TDG) reported fiscal 2007 (year ended September 30, 2007) results that show a company with strong top-line growth, substantially higher profitability, and a much more leveraged balance sheet following its acquisitions. Net sales rose 36.2% to $592.8 million, of which roughly $61.5 million (14.1%) was organic growth and the remainder came from acquisitions, most notably ATI (acquired February 2007 for $430.1 million) and CDA and Bruce Industries. Operating income grew 97.9% to $233.8 million, though the prior year included a $48.6 million one-time refinancing charge, so the comparison is flattered. Net income rose to $88.6 million ($1.83 diluted EPS) from $25.1 million. EBITDA was $257.8 million (43.5% margin) and EBITDA As Defined, the company's covenant-based metric, was $274.7 million (46.3%). The company's aftermarket exposure is a key strength. Management estimates that about 60% of fiscal 2007 sales came from aftermarket work, that over 90% of sales came from proprietary products, and that about 75% came from products where TransDigm is the sole source. These characteristics support the higher, more stable margins the company describes. Customer concentration is significant, however: Boeing (including Aviall) accounted for about 16% of sales and Honeywell for about 11%, and the top ten customers represented about 51%. The main investor consideration is leverage. Total indebtedness was approximately $1.36 billion, about 73.6% of total capitalization, and interest expense was $91.8 million. Most of the senior secured debt floats, so a one-percentage-point rate increase would add roughly $7.8 million in annual interest, partly offset by an interest rate swap. Goodwill ($1.25 billion) and intangibles together make up roughly 76% of total assets, which creates impairment risk. The company also faces a DOD Inspector General pricing review covering five subsidiaries, which recommended a voluntary refund of about $2.6 million. Management does not plan regular dividends, and Warburg Pincus controls about 45% of the stock.
Nov 21, 2007
2006
TransDigm Group Annual Report, Year Ended Sep 30, 2006
TransDigm Group (TDG) reported fiscal 2006 (year ended September 30, 2006) net sales of $435.2 million, up 16.3% from $374.3 million, with organic growth of about 10.7% driven by commercial aftermarket recovery and rising OEM production rates at Boeing and Airbus. Net income fell 27.6% to $25.1 million, but this was driven by a one-time $48.6 million refinancing charge in June 2006. Excluding that charge and other one-time items, the company's EBITDA As Defined rose to $194.4 million, or 44.7% of net sales, and gross margin improved as cost of sales fell to 49.1% of sales from 50.8%. The balance sheet is now heavily leveraged. Total debt is $925 million, consisting of a $650 million term loan, $275 million of 7 3/4% senior subordinated notes due 2014, and an undrawn $150 million revolver. Following the June 2006 refinancing, the company retired its 8 3/8% notes, the 12% promissory notes, and the TD Group loan facility. Roughly half of the term loan is hedged with a swap, and the company says it does not expect to pay regular dividends. Operating cash flow was only $3.1 million in fiscal 2006, reflecting about $63 million of accrued interest payments and $26 million of deferred compensation distributions, but management expects internally generated cash to be sufficient through fiscal 2007. The main investor concerns are concentrated ownership by Warburg Pincus (about 70%, which also makes TDG a controlled company exempt from certain NYSE governance rules), a DOD Inspector General pricing review that recommends a $2.6 million refund and may lead to cost-based Strategic Supplier Alliances, and goodwill and intangibles totaling roughly 77% of total assets. Acquisitions are an ongoing growth lever, with the CDA InterCorp deal for about $45 million closing in October 2006.
Nov 28, 2006