Cumulative Growth of a $10,000 Investment in Stock Advisor, TransDigm Group Inc (TDG) Q2 2020 Earnings Call Transcript @themotleyfool #stocks $TDG, TransDigm Group Inc (TDG) Q1 2020 Earnings Call Transcript, TransDigm Group Inc (TDG) Q4 2019 Earnings Call Transcript, TransDigm Group Inc (TDG) Q3 2019 Earnings Call Transcript, TransDigm Group (TDG) Q1 2019 Earnings Conference Call Transcript, Copyright, Trademark and Patent Information. Did you guys kind of put your best assumptions in there? I mean, we're just if you took the run rate was 100, we think the run rate's going to drop down to 25. That's what we believe the bulk of our products are. There's I don't have a lot of I know that there's going to be an inventory overhang, and we tried to give you a range to hit that. In other words, a little will be incremental fall through the profit or something. Just as your thanks for the details on the market-weighted products. Mike Lisman-- Chief Financial Officer It was de minimis this quarter in Q2. [Operator Instructions]. The Ascent is The Motley Fool's new personal finance brand devoted to helping you live a richer life. Well, obviously, when this crystallizes, we will be able to issue guidance around what will happen in 2021 and 2022. No. The speculation side of this is always hard for us to rationalize. And then also if you'd even give us some direction on how much higher the margins are in that older bracket versus your average aerospace aftermarket. Certainly, there may be some spots, a part number here or there. We define cost as revenue minus EBITDA As Defined. Yes. IATA recently forecast a 48% decrease in revenue passenger miles in calendar year 2020 compared to 2019. You need production levels to bring inventory down, and it will happen. So we've looked at this across the board and not really seen any trend that we need to exploit or there's an opportunity to. Or are we talking more a couple of hundred basis points of potential deterioration? CLEVELAND, July 30, 2018 /PRNewswire/ -- TransDigm Group Incorporated (NYSE: TDG) today announced the appointment of Mike Lisman as Chief Financial Officer and the appointment of Jim Skulina as Senior Vice President of Finance of TransDigm Group Incorporated. Hey everybody. Thank you very much guys. No significant change. And then last one. That's possible. Are there any other kind of lumpy orders or drivers this year that we should be thinking about as we model out next fiscal year as perhaps nonrecurring? Most of these actions are in place already. And we had lumpy orders last year just in different quarters than we're getting them this year. Yes, I would say I mean, I don't think our costs are going to stay down by this magnitude as the cost go. But how are you thinking about that? CLEVELAND, July 30, 2018 /PRNewswire/ -- TransDigm Group Incorporated (NYSE: TDG) today announced the appointment of Mike Lisman as Chief Financial Officer and the appointment of Jim Skulina as Senior Vice President of Finance of TransDigm Group Incorporated.. Mike brings strong experience in the private equity industry, mergers and acquisitions and the capital markets to his new … So this is related to a market weighting. With that, I'll turn it back to the operator to kick off the Q&A. Exactly how badly, we just can't yet know for sure. Although bookings grew across most of the businesses, APKWS and parachute-related bookings were especially strong in the quarter. Both the M&A world and the capital market world are always difficult to predict, especially today. Hi, good morning and thank you everyone for the time. Longer term, the impact of COVID-19 is fluid and continues to evolve, but we anticipate significant negative impacts on our commercial OEM market for some uncertain period of time. Okay. That's the way our profile might look like. How has your pricing held up in previous experience? You talked a little bit about the parachutes and what have you. He will work closely with Mike to assure a seamless transition and also assist in the appointment of a chief accounting officer to assume oversight of public reporting, internal accounting and tax functions. But we'll see. Are you starting to think differently about the business in terms of maybe the distribution versus direct mix? To summarize some of the reasons why we believe this, about 90% of our net sales are generated by proprietary products and over 3/4 of our net sales come from products for which we believe we are the sole source provider. Nick, on the effort to hold the EBITDA As Defined Margin somewhere in the zone of where you had it in the first half, understanding that it's a difficult task with how quickly things are moving but you have tried to match the cost to the revenue, in hearing you talk about that proving harder than prior downturns, do you foresee a scenario where your EBITDA margin gets a 3-handle on it in any of the next four quarters? In addition to safety, the two most important items we focused on immediately were: one, reduce our costs as quickly as possible; and two, assure substantial liquidity that things get worse than might be expected. Good morning. Business jet utilization data was already pointing to stagnant growth before this economic downturn. Is it also similar in terms of your narrow-body versus wide-body mix? The company's filing status is listed as Active and its File Number is 0374906. After completing the CAPTCHA below, you will immediately regain access to www.streetinsider.com. We follow a consistent long-term strategy. All that cost-cutting is getting you somewhere in the low 40s during the downturn in terms of EBITDA margin. So we do have some in there. In light of the uncertainty around the ultimate impact of COVID-19 on global market and economic conditions, in the highly fluid commercial aerospace industry, we still feel it is too early to provide forward-looking guidance at the current time. W. Nicholas Howley -- Executive Chairman of the Board of Directors. Or is it very diffused in terms of just the number. And we've done the analysis with our auditors at EY, and we've got a pretty good cushion across the board here. And there are no further questions at this time. Revenues and EBITDA As Defined were up substantially, and we continue to generate real intrinsic value for our investors. Next, I would like to review our COVID-19 response and expectations in more detail. A follow-up question. Yes. From an overall cash liquidity and balance sheet standpoint, we think we're in good position here. Major product offerings, substantially all of which are ultimately provided to end-users in the aerospace industry, include mechanical/electro-mechanical actuators and controls, ignition systems and engine technology, specialized pumps and valves, power conditioning devices, specialized AC/DC electric motors and generators, NiCad batteries and chargers, engineered latching and locking devices, rods and locking devices, engineered connectors and elastomers, cockpit security components and systems, specialized cockpit displays, aircraft audio systems, specialized lavatory components, seatbelts and safety restraints, engineered interior surfaces and related components, lighting and control technology, military personnel parachutes, high performance hoists, winches and lifting devices, and cargo loading, handling and delivery systems. EBITDA As Defined Margin in the quarter was just under 47%. We did it based on number of weeks owned, and what we'll do in the 10-Q filing, you'll see the detail. That's great, thank you very much. They tend to have slightly higher dollar ship set content, but the volume isn't there. Just staying on this for a second. You're just guessing anything until that starts to happen. We make the best estimate we can for a six-month run rate. We will continue to vigilantly monitor our operations and external events and keep the market updated on developments as appropriate. So they're performing very well in the market. Please go ahead. And lastly, our capital structure and allocation are a key part of our value creation methodology. These are not meant as revenue guidance. Kevin will explain this in some more detail. We think a steady state with this mix of business is somewhere in the mid-40s. These actions are incremental to the cost mitigation efforts previously implemented in the second quarter of fiscal 2020, mainly, in response to the 737 MAX production rate changes, and brings our total workforce reduction since our last earnings call to approximately 22% to 25% versus planned head count levels. I think they're interlocked. I think it's too early to draw any conclusions. Transdigm Inc. is a Vermont Foreign Profit Corporation filed on July 24, 2020. On taxes, our fiscal 2020 GAAP cash and adjusted tax rates will be three to eight percentage points lower than the previous guidance due to benefits included in the Cares Act, primarily the expansion in the interest deduction limitation from 30% of EBITDA to 50% of EBITDA.Moving over to the balance sheet and liquidity. While the actions that the current circumstances require ranging from broad cost reductions to furloughs, and a rightsizing of the employee base are difficult to implement, I have no doubt that we will better position the company to endure and emerge more strongly from the ongoing weakness in our primary commercial end markets. As has happened in last in previous downturns, we tend to come out of these things with a better cost structure than we went in because we tend to not put the cost back in the same rate the revenue covers. With that, I will now turn the call over to Nick. Just a couple of questions for you guys. That's right. The only way you get in trouble here is if the situation becomes much worse than anyone expects and you run out of fuel or cash. But since we think of ourselves as market-weighted, we're not as concerned right now. So all things being equal, if that one drops off more sharply than the rest of the business, which is likely in the situation here, at least for a little while, that's a headwind on your margin. We'll have to see how this plays out. Market data powered by FactSet and Web Financial Group. I appreciate it. Specific percentages on profitability by end market, but we can say the commercial OE business, as we look at it, to the best of our abilities, it's a profitable business. Our long-standing goal is to give our shareholders private equity-like returns with the liquidity of a public market. Yes. So now, during this pandemic and in the aftermath, the outlook for business jets is more unpredictable and certainly weaker. With that, I'll now turn it over to our Chief Financial Officer, Michael Lisman. Some of our parts get replaced by time on wing. We would also like to advise you that during the course of our call, we will be referring to EBITDA, specifically EBITDA As Defined, adjusted net income and adjusted earnings per share, all of which are non-GAAP financial measures. Certainly, there is going to be some impact in the future, but we're just going to have to weigh that as it comes about. Your next question comes the line of Robert Stallard of Vertical Research. As Nick said, the next few months, sharp decrease. We've looked at USM since then regularly. We look at the EBITDA margins as kind of running in the mid-40s. It is already clear that the COVID-19 pandemic will have a significant negative impact on the commercial OEM market.
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