01—Abstract
Summary
Summary of the 10-K filed November 7, 2024. Cited figures are marked; the original filing is the authoritative source.
TransDigm Group (TDG) reported fiscal 2024 (year ended September 30, 2024) net sales of $7,940 milliona, 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 millionb (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 billionc 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 billiond 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.
02—Key points
Key Highlights
- Net sales grew 20.6% to $7,940 million, with organic sales up 16.2%; defense sales rose 18.9%, commercial OEM 20.4%, and commercial aftermarket 12.0%.
- Gross profit margin improved to 58.8% from 58.3%, and EBITDA As Defined rose 22.9% to $4,173 million (52.6% of net sales).
- Net income attributable to TD Group increased 32.0% to $1,714 million; diluted EPS was $25.62 versus $22.03 a year earlier.
- Total debt reached approximately $24.9 billion, about 134% of book capitalization, with interest expense-net up 10.5% to $1,286 million.
- Special dividends of $110.00 per share were declared in fiscal 2024, totaling roughly $6.2 billion including dividend equivalents, funded largely by $21 billion of debt financing and existing cash.
- Stockholders' deficit widened to $(6.3) billion, and pro forma cash liquidity after the October 2024 dividend payment is about $2.9 billion.
- Goodwill of $10.4 billion and intangibles of $3.4 billion make up roughly 54% of total assets, creating impairment risk if performance weakens.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2024, TransDigm Group kept $0.22.
- Revenue$7.94B100.0%
- Cost of revenue−$3.27B41.2%
- Gross profit$4.67B58.8%
- Operating costs−$1.14B14.4%
- Operating income$3.53B44.5%
- Interest, other & tax−$1.82B22.9%
- Net income$1.71B21.6%
Where FY2024 revenue went
$7.94B- Cost of revenue: $3.27B, 41% of revenue
- Interest, other & tax: $1.82B, 23% of revenue
- Net income: $1.71B, 22% of revenue
- SG&A: $980.0M, 12% of revenue
- R&D: $107.0M, 1.3% of revenue
- Other operating costs: $54.0M, 0.7% of revenue
Kept 22% as net incomeSG&A $980.0M · 12%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2024filed November 7, 2024Financial Statements
FY2024 against FY2023
| Line item | FY2024FY2023 | Change |
|---|---|---|
| Revenue | $7.94B$6.58B | +20.6% |
| Cost of Revenue | $3.27B$2.74B | +19.1% |
| Gross Profit | $4.67B$3.84B | +21.6% |
| R&D Expenses | $107.00M$105.00M | +1.9% |
| SG&A Expenses | $980.00M$780.00M | +25.6% |
| Operating Income | $3.53B$2.92B | +20.8% |
| Net Income | $1.71B$1.30B | +32.0% |
| EPS (Basic) | $25.62$22.03 | +16.3% |
| EPS (Diluted) | $25.62$22.03 | +16.3% |
| Shares Outstanding (Basic) | 57.80M57.20M | +1.0% |
| Shares Outstanding (Diluted) | 57.80M57.20M | +1.0% |
05—Questions
Frequently Asked Questions
How did TransDigm's core revenue and margins perform in fiscal 2024?
Net sales rose 20.6% to $7,940 million, with organic growth of 16.2% and $288 million from acquisitions. Gross margin widened to 58.8%, and income from operations increased to $3,531 million, or 44.5% of sales. Growth was broad-based across defense, commercial OEM and aftermarket channels, and about 55% of sales came from the aftermarket, which historically carries higher margins.
What is the impact of the special dividends on TransDigm's balance sheet?
Special dividends of $110.00 per share were funded by new debt and cash on hand. The $75.00 dividend declared in September 2024, paid in October 2024 for about $4.3 billion including dividend equivalents, is accrued as a $4,216 million dividends payable liability at year end. This pushed the stockholders' deficit to $(6.3) billion and reduced pro forma cash liquidity to about $2.9 billion, although the company still reports $843 million of undrawn revolver availability and a further $163 million under its securitization facility.
How exposed is TransDigm to interest rate changes?
About 77% of gross debt was fixed-rate at September 30, 2024, which is above the company's target of at least 75% fixed. The remaining variable-rate term loans (about $8.7 billion) and securitization borrowings are exposed to Term SOFR. Management estimates that a one-percentage-point rise in rates would increase annual interest costs by about $30 million. Interest rate swaps, caps and collars partially hedge this exposure.
What are the main risks to TransDigm's business?
Key risks include concentration among large customers (the top ten accounted for about 42% of sales), cyclicality in commercial OEM and aftermarket demand tied to flight hours and airline profitability, U.S. defense budget dependence and government contracting risks, and supply chain and cost inflation on fixed-price contracts. The company also faces high leverage, acquisition integration risk, and a large goodwill and intangibles balance that could be impaired.
Does TransDigm pay a regular dividend, and how should investors think about capital returns?
TransDigm does not pay regular quarterly or annual dividends and does not expect to. Instead, it returns capital through periodic special dividends at the discretion of the board, subject to debt covenant restrictions and available surplus. Its stated capital allocation priority is capital spending, acquisitions, special dividends or buybacks, and then debt prepayment. The $2.2 billion repurchase authorization had $1,288 million remaining, but no repurchases were made in fiscal 2023 or 2024.
06—Continue