TransDigm Group supplies a variety of behind-the-scenes componentry for aircraft manufacturing, including audio systems, pumps and valves, and power conditioning devices. Operating through a plethora of subsidiaries, TransDigm makes and distributes systems and components for commercial and military aircraft. Its products are found in several Boeing and Airbus airplanes, Bombardier and Embraer regional jets, and a number of military planes and helicopters. TransDigm is a frequent acquirer of companies, recently averaging about four per year. The majority of the company's products are sold to customers in the US.
TransDigm operates in three segments: Power and Control (contributing more than 55% of revenue), Airframe (about 40%), and Non-aviation (less than 5%).
The Power and Control segment makes and sells systems and components that provide or control power for aircraft. Its products operate through electronics, fluid (hydraulic), and mechanical motion control. The segment offers mechanical/electro-mechanical actuators and controls, ignition systems, pumps and valves, power conditioning devices, AC/DC electric motors and generators, and cargo loading systems.
The Airframe division produces non-powered systems and products that are used in the airframe, for example, latching and locking devices, connectors and elastomers, cockpit security components, and aircraft audio systems.
The Non-aviation segment includes products such as seat belts and safety restraints for ground transportation applications.
Cleveland, Ohio-headquartered TransDigm operates about 130 subsidiaries throughout the US, Europe, and Asia.
Sales and Marketing
The company sells its products primarily through its own sales organization with a business unit manager assigned to specific products and supported by account managers and sales engineers. TransDigm also uses several distributors that provide logistical support and serve as the primary customer contact for certain smaller accounts. Its major distributors are Aviall (a subsidiary of Boeing) and Satair (a subsidiary of Airbus). The company’s top ten customers account for more than 40% of sales.
TransDigm's business serving customers in the commercial, regional, business jet, and general aviation aftermarket accounts for more than 35% of total sales. The commercial aerospace OEM market, comprised of large commercial transport manufacturers and regional and business jet manufacturers, accounts for roughly 25% of total sales. The defense market represents approximately 35% and non-aerospace sales make up about 5%.
In recent years, TransDigm steadily increased revenue, lifting such results from just under $2 billion in FY2013 (ended September 30) to FY2018 results exceeding $3.8 billion. In FY2018, the company's $3.8 billion sales figure represents a 9% increase over 2017. Organic sales—those from subsidiaries already within its family—saw a 5% increase in sales primarily driven by commercial aftermarket and defense sales. Revenue from companies acquired within the previous twelve months was a little more than 3% of total sales.
Although faced with increased cost of sales, increased SG&A expenses, and higher interest expense, TransDigm's net income still sailed 60% higher in 2017 to $957.0 million primarily due to higher net sales.
Cash on hand at the end of the year was $2.1 billion, an increase of $1.4 billion from FY2017. The company generated $1.0 billion in cash from operating activities. Investing activities used $683.6 million, with most of it going to acquisitions costs. Financing activities provided $1.0 billion primarily from net proceeds from term loans and issuance of notes.
Strategically, TransDigm focuses on specialized products rather than commodities. Most of the company's sales come from proprietary products for which TransDigm owns the design and/or is the sole-source provider for a particular aircraft. In 2017, TransDigm’s subsidiaries innovated new components, including the Aerocontrolex Potable Water Ozone Disinfection Cart, the Airborne Systems Ram Air parachute system, Amsafe’s upgraded passenger seat belts, and Whippany actuation systems.
TransDigm approaches operations and managerial oversight like a private equity firm. It owns about 130 subsidiaries and allows them all a certain amount of autonomy to serve the needs of their respective markets. The company continues to look to acquisitions to fuel its growth.
Another revenue producing endeavor arises from the proliferation of its componentry across manufacturers and industries. It has a large install base, estimated to be some 95,000 aircraft, for which it is typically the sole source of replacement and aftermarket products.
Mergers and Acquisitions
TransDigm acquires companies that offer niche products that fit well with other subsidiary operations or have significant aftermarket sales.
The company went beyond that pattern in 2019, when it spent $4 billion to buy Esterline Technologies Corp, an aerospace and defense parts supplier with a large aftermarket portfolio including knobs, sensors, and materials. (TransDigm had purchased the Kirkhill elastomers business from Esterline in 2018 for $49.3 million). Esterline, which had $2 billion in annual revenue, brings its platform of proprietary and sole-source products for the aerospace and defense industries, including significant aftermarket offerings.
In 2018, TransDigm acquired Skandia Inc. from Graycliff Partners LP for a total purchase price of approximately $84 million. Skandia, headquartered in Davis Junction, IL, offers seating foam, foam fabrication, flammability testing, and acoustic products for the business jet market. It will operate within TransDigm's Airframe segment. The company also acquired Extant Components in 2018 for $533 million. Extant provides proprietary aftermarket products and repair and overhaul services to the aerospace and defense end markets.
In 2017 the company purchased three separate aerospace product lines for a total price of approximately for $106 million.
600 WEST WILBUR AVENUE
Coeur D Alene, ID 83815-9496
Phone: 1 (208) 765-8000
Employer Type: Privately Owned
Buyer Planner: Jaime Arkle
Director of Business Development: Scott Byre
Vice President Engineering: Craig Moss
Employees (This Location): 325
Employees (All Locations): 330
Coeur D Alene, ID