TDG - Earnings call transcript Q4 2017 | TransDigm Group Incorporated

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the Q4 2017 TransDigm Group Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a Q&A answer session instructions will follow at that time.

As a reminder, this conference call is being recorded. I would now like to turn the conference over to Ms. Relations. Investor Sabol, Liza is podium yours. the Ma'am,

Liza Sabol

Chief welcome Thank Paradie. for Officer, quarter morning Kevin weeks. fiscal Howley; A and fourth two Stein; available and Officer, of TransDigm's conference you are and call. Terry Operating Chairman this replay and be earnings call With XXXX the today's the Nick will Financial to next me Chief Officer, Executive Chief TransDigm's President on broadcast

to the In XX-K due addition, please on the by to we of our file observance SEC note, expect Day Veterans Monday tomorrow.

made to Before historical which this we in would we not begin, remind like you are statements. that statements during fact, forward-looking are call,

the We forward-looking sec.gov. about materially to during income the or adjusted the statements, share, we results and available important information the specifically measures. the footnotes could As tables most all over to earnings see that As a net or and of turn directly I company's you to would to comparable course income are of reconciliation GAAP latest Nick. further measures EBITDA, non-GAAP EBITDA adjusted also section filings will call of Defined, Defined, earnings from through financial adjusted share. of now Please the in related cause website or differ and that will expressed a the and presentation with to net release of which EBITDA, adjusted per the earnings actual call, advise the referring please the For our those at Investors SEC, refer be like factors EBITDA in implied per

W. Nicholas Howley

the strategy. our guidance will summary a a quick review Terry years. for of then Kevin review always with both key the Good morning. Today, give operational start and I'll financials details some for I'll and both XXXX. market then through of years comments run quick will XXXX, the about for as consistent off

restate, create of have ability to of To and by our our in in why business XX% generated is today. this, through amount for produced much are its cover phases which value model summarize industry, fair from shareholder to products the a a we have net over unique half of the to of three believe stability in proprietary intrinsic here downturns. sales believe about revenues sales cycle. Over the and aftermarket Again we margin come and some have of and are our the of reasons We both our believe relative consistency net the source all the quarters our sales. historically we provider. higher provided higher sales products Aftermarket comes sole from EBITDA percent we gross its

our management value-based We on driver-concepts. consistent our sheet. private we have simple, Two, do market. longstanding the businesses careful stay with aerospace on equity we shareholders is aftermarket We both a a as operating Our have focused content. balance own long-term goal this, to three with our and of proprietary strategy. the well-proven, of To creation, like public of based operate liquidity methodology significant details value the follow give well value returns to a as

Fourthly, a issue and that management compensation businesses to lastly capital efforts and our key fit capital system part unique closely structure see we we allocation a view the shareholder our value. our Third, we as and clear PE a where we a and strategy the aligns path, returns like organization create focused maintain decentralized of or with a the that shareholders. structure with acquire

basically as know our you you we priorities at our remind closely regularly we typically and have are allocation. choices As look capital To follows. for four again,

our in First, existing invest businesses.

choice. strategy are almost accretive always our These requirements. return with make first and Second, acquisitions our two consistent

stock how or back a our manage conditions attractive candidates last extra any criteria. the related capital three $X likely tax far and dividends pay three and off aerospace between. fiscal XXXX still billion and different of And the allocation. low few is our buybacks. cost return years, conditions. our last attractive choice through shareholders, special met current after capital about examples of acquisition capital opportunities, we but business give this of we've seen Third, XXXX, number of acquired that especially were lastly, In to businesses in we and shareholder debt, given we the In proprietary acquisition saw market XXXX either In strategic

capital a sheet we on healthy we'll for the summary, cash we powder $X short best price, has what to the Given dry billion did drop of but shareholders. We've chose we've special about think We'll continuing maintained the businesses. and capital capital the a business existing and sharp, consistently our allocate both aerospace $X.X our We return and our allocate of but to chance this in our in market additional billion proprietary to the attractive balance share to kept in through markets credit the to the acquired over fully shareholders. In the structure we dividends businesses. to see XXXX is We and we brings significant as of manner XXXX, fiscal three about In $X.X stock and returned beginning depending about years, since specific billion past invested shareholders. have acquisitions. our maximize done that the period, that conditions, last return buybacks. opportunistic same our year our balance

the The Defined some XXXX busy of to than our our was of in some a of original shipments. modest to X% most discontinued Versus company midpoint moving businesses operations. recent a by revenues of from our result guidance. revenue eye guidance bit was X% lower a distractions our of There revenues guidance were year, Now, the the XXXX. of OEM were year. base in SCHROTH this our the exceeded EBITDA about timing about the also Most was commercial the we lower. kept half shortfall while first As spite midpoint In summarize original on ball.

the basis, bit hand, guidance. was same our EBITDA midpoint higher other a recent on the On than

in flat. this. On up aftermarket revenues Kevin versus single-digits. mid Commercial to prior full were and basis to year close was the was same-store will little revenue a single-digits more color basis, on give the on defense up about expand mid the low and a you year OEM

Our versus prior pretty than fiscal GAAP growth acquisitions. Defined little revenues in minimal year were from a versus defense fiscal year growth was XXXX revenue no the we In Department the for expected required up overall aerospace before to year. up EBITDA seatbelts with unusual the a revenue our XX.X% less restraint sell the was XX% Justice commercial size and and close, All the the deal, year margins SCHROTH expanded impact with decided As any was the general, better. avoid challenged all, business our close. dilution XXXX, prior some in little versus the was substantial positive and and less though After HSR the protracted note, situation dispute. a in of we given small acquisition. filing discussion restraints, position DoJ of On seatbelt uniquely

forward our strategy. in the anticipate We have any and go acquisition on process do We arrangement. identified a overall buyer of finalizing not impact the

operations. of You'll to EBITDA see million moved -related in $X SCHROTH XX-K discontinued our about was

but pipeline will acquisitions, financially wont' respect will actively have possibilities value With opportunities the overall a be Closings disciplined the on material. though of focused opportunities. picture to opportunities at recently. a always we are to is number continue our looking We looked difficult of sale remain reasonably We've that loss and The tight creation active. meet criteria. predict, we in on at the

XXXX. fiscal year on to now for guidance Moving

cycle. into head we we transport OEM have concern XXXX, of As duration about some continue the the commercial to

and to look the plane comfort, changes. move However, flight quickly and if some very which situation the backlog in hours ready industry but continue the gives commercial transport we're cautious remain positive, us we to

we've fiscal range financial For usual the metrics As defined. like around EPS given EBITDA year key as XXXX, Defined, as revenue a

as outlook year year intend long we fiscal on GAAP The As This in the guidance billion all basis of XXXX X% the XXXX, adjust the midpoint growth. assuming almost be and in range, to midpoint no year-over-year. $X.XX as up don't fiscal continues is follows. acquisitions is on our Based the or a to full revenue quarterly. year our is guidance organic above our of

revenues years, than the fiscal three the past to the quarters. anticipated be QX other of lower in year XXXX, As are

modest. percent XXXX prior EBITDA year line you as lowest seen looks being total about the are We be revenue year the X% roughly of anticipate will move same and of year. billion, impacts QX know a is versus currency Defined midpoint do X% the with the basis. as we've revenue, as constant a percent prior acquisitions throughout guidance fiscal the the that The the As $X.XX to should of with XXXX were QX prior year in on year previous is immaterial. As up the generally growth year's a move in the Currency margins range QX. the

mid-single-digit commercial based growth revenue following the revenue on The jet is percent rate, higher forma revenues X% the the aftermarket. almost that. with same-store commercial with EPS guidance as than $X.XX share, is the a you a adjusted prior mid-single a to and in up little helicopter So revenue about digit be anticipated in all or Terry that, the the the like business the on details EBITDA year. growth go aftermarket versus the aftermarket the transport organic. midpoint growth through will flat On and in percent, the growth OEM commercial is pro of basis,

we low considerable So from on high reasons, our structure some quantify fiscal additional should year is aftermarket $XXX in subsections. additional on Defense somewhat year mid generate to XXXX utilization sections, believe the number the Kevin transport expect about revenue we younger close gave by activity to out and five-year fiscal impacted especially single-digits. with we submarket the color cash exactly, aircrafts. will XXXX, military number the commercial difficult up In or Without in growth for and any to aftermarket. a still operations. detail be acquisitions various and in commercial capital demand of these of million

it the to continue bit our originally consistent year. not intrinsic than fiscal was value we continue materially However, In XXXX, with for long-term a I'm do busy additional investors. confident now, hand a on a Kevin, summary, XXXX. good and XXXX Through can to indicated. let me we'll XXXX who'll business, the to year the of we of comment and subsections expand if value strong create strategy look and we detail. our mix level And to give our focus different intend quarterly

Kevin M. Stein

Thanks, Nick.

quarter fiscal was seen, you've operationally year which had another year. challenges some As strong into all good and shaped QX a matter, that for XXXX XXXX, significant of

category. Now, let's review our revenues by market

aftermarket. about and versus makes which will up pro market, our the For about X% OEM OEM of I'll commentary about OEM prior were when our by with remainder commercial of fiscal discussion flat, up year. XXXX into of year split compared amount is our and year call, of OEM revenue, revenues revenues versus Commercial forma similar basis a color up provide XX% of In which we the on commercial XXXX. In about QX our transport were the commercial year-over-year. revenues most market, similarly the year a for prior QX and flat make

explained which last much appears we platforms ramp OEM rate due our to new inventory on or of customers, quarter, As commercial management platforms headwinds wide-body in ups by have OEM created the simply on wide-body slower market. reductions

no commercial down but an the transport core changes So, was XXXX in up occurred. content ship set OEM have at for year and bookings, significant

is timing softness related. simply any So

the been content program current platforms. ship the as this set recently, an is ship on and in our a of that has set reference the CSeries narrow-body interesting press greater significantly for Speaking to program future than content Bombardier in platform is

up bookings positioned such in Bombardier with Dynamics GXXX in year and Key General not XXXX, OEM market OEM the up revenues, which section for flat and For global make platforms single-digits Cessna jet our XXXX. and similar percent design end modestly as helicopter the as for bookings. overall improved. TransDigm mid year have revenues and business this in future wins brought demand were were this revenues, Global market GXXX, has commercial XX% QX about in a business jet the down of Longitude, by growth with QX XXXX consistently in

year on grew and aftermarket provide on just by for quarterly fiscal which XXXX. under the commercial X% comfort moving XXXX, lumpy to in Now brought expanded than can aftermarket basis, to faster business, total about X% a year revenue some our sales in growth. commercial be the revenues and up quarter Bookings,

commercial help our had me segments. provide the color let additional and previously Now a on offered submarket little commercial information better our our aftermarket aftermarket on submarkets business explain business. We to

it unless no from our expectations. additional information Going forward, we will provide changes this longer materially

split we on largest for at to and revenue aftermarket effort clarity important our about pieces additional passenger this recently, market Commercial TransDigm. is of total As some XX% aftermarket an we have the in discussed transport market in commercial commercial revenue into color four segment provide sales. aftermarket the

current XXXX. for And by average previously quarter mid single-digits, this of business expanded compared fiscal year the with with aftermarket year three-year upper single-digits, the the For roughly have in-line commercial when reported by in slice same for submarket. this grew our quarter the

transport For fiscal interiors aftermarket robust growth about for which in the the declined market year-over-year a year-to-date by very commercial revenue, discretionary XX% similar This year. aftermarket, our had interiors for QX has decline a years. after accounts last and commercial difficult revenues mid-teen of experiencing significantly the three total

reported have a in this due appears Softness refurbishment in this recently decline who not fleet various space. to projects, others unlike in market

and have in refurbishment the To-date, no have appreciable in share submarket. market our repair for this we to win push we Although challenged recent orders these businesses. changes outs future, seen continue

commercial For fiscal revenue a growth, for transport signs revenues This finishing year-over-year recovery second encouraging, strong up as total it XXXX would recovery. aftermarket, about accounts and drive aftermarket year freight XX% in our a finally of the appear which is half freight of QX is single-digits. aftermarket, mid showing year growth the average in the helped commercial of demonstrated

strong our and non-proprietary proprietary Telair continue and to have products stabilize. nets performance businesses Our begun containers

and tends were accounts the similar fiscal jet seeing future, but our some improve takeoff single-digits do by period of recent in bookings cycles through aftermarket, Finally of of jet low our XXXX market are amount not helicopter into of this aftermarket fiscal The for Year-to-date, that QX and aftermarket, this quarters, any commercial total a the the same ago. we the given with are not yet as the recovery. the go final for year could this piece the of have of XX% a as revenue business year about year to in the indication flat segment which improvement landing in business we insight for XXXX. sales OEM, down market. There is and such, same in

summarize on The commercial segment recovery solid the demonstrated of freight passenger strength. some continued segment our total units. So signs our for aftermarket, to business showing all now

finally, appear favorable into have be the Our are markets recovery, to clear but not discretionary metrics interiors growth. stabilizing. jet no shown business do translating revenue signs of helicopter And usage yet

year defense which market, let which remains revenues, which unchanged third aftermarket touch both relatively me total a about for Previously this year aftermarket total a few close, to come defense businesses but to provide the has most segment expanded bookings in product platform Whippany large continue have to as bookings year a XXXX. bookings for the significantly by business. about OEM revenue. Now modestly solid our to year, growth demonstrated a of in an defense story revenue for the only and were Airborne our confidential for X% at narrative, multi-year on from a QX OEM a Fiscal for year Total and year coming XXXX was parachute fiscal the TransDigm. new versus of includes The defense encouraging clear bookings up improvement be appears Systems prior businesses, and market. market, been the and strength OEM Systems as Actuation segments strength defense both due have in of bolstered on

in bookings must the in be As defense these off market of a shipments always, points. lumpy data forecasting are used caution and like few common and

for year almost accomplishment the This me for XX% to value margin margin and As more our The indicates on to year-over-year a fiscal TransDigm. reported our integrate points. that percentage drive our will to opportunities company of an the find represents X improvement of business for on touch numbers, revenues and in Defined detail profitability provide let EBITDA XXXX, at TransDigm. to drivers significant Terry base acquisitions continue XXXX continues and but about came a on into within Moving basis, operating improvement

as XXXX in Forbes business of Innovative was the driver profitable Finally, TransDigm again strategy the important ability new in industry. our value Most once to to World's the our wins our and list, statement an and capture performance our Companies about market, recognition named unique specifically business a model

another on profitable conclude outstanding year generation. another for drivers value business TransDigm, to solid fiscal productivity and me focused value XXXX XXXX stating let was the our new year on our So have in by all-in-all And pricing. of year of integration value us deliver acquisitions made successful allowed of XXXX

details some XXXX on briefly touch me our plan let guidance. for Now

transport appears previous for single market interiors begun interior global regional some for It stabilize related this grow and of remaining below-average by opportunities For should XXXX, TransDigm. revenues and performing single freight commercial as with in number business discretionary to stabilize OEM expands demand years digit range, narrow follows. production at are airlines. strength guide us aftermarket inventory parts single-digit Commercial and flat. build jet mid for recent we as aftermarket the continues of after body transport needs expand has to for Commercial flat-to-low designs Commercial participate a for a mid at passenger XXXX, guidance. a have number the rates digits single-digits for performance. helo XXXX. rate line with transport Commercial trends expands single OEM we the following digits market demand continued that OEM to in of proprietary aforementioned Commercial and to revenues non-proprietary expansion. at Both estimated wide-body products roughly our with submarkets with for as grow mid-to-high range, this mid-to-high spare expands freight and in

jet expect we for softness. some helicopter counter business jet a flat improvements the as aftermarket largely see helo business in continued market, Finally, to we aftermarket,

We low aftermarket are an outpacing in positive, parts to both although growth guiding opportunity. backlog the are as see provide replacing range. OEM mid spare any single-digit For defense the growth, military depleted we to total and maintenance defense market,

drivers pricing As involving of with of with This, Chief continued to and along value horizon Terry footprint. emphasis like will production it Officer, on With productivity from always, plants, products projects focus we our innovation in again number consolidation I value a to our now will Paradie. that, opportunities, XXXX and our new focus on XXXX on XXXX. acquisitions over and turn the maintenance would once routine for our opportunities Financial be

Terrance M. Paradie

you, Kevin. Thank

occurred of review for assumptions certain the summary consolidated XXXX, million quarter, operations summarized fiscal and a net under financial Franklin Organic of approximately result activity a the to by the tax. sales the will the all little period. during being in just wanted loss fiscal income X% already SCHROTH the for results review the offset when million key we price of the after collective so and $XX yearend lines Fourth in income price discontinued new $XXX than our purchase give discontinued of from fiscal for from operations This we financial divestiture. up been X% excluded has statement review now modest events Nick loss $XX.X sales that income sales were is from quarterly year net statement line at to I items labeled quarter brief lower give for Before The adjustments on million, accounting and fourth months statement impact excluding the SCHROTH seven the the the I XXXX. results, the $XX the selling impacts & item prior of were business, year. a up contributed color of quarter. acquisitions line million million, The operating a $XX I product condensed or primarily greater partially estimated business. three Tactair, additional of than Young acquired owned of the

of was Our fourth increase an million, $XXX XX%. profit quarter gross

the profit year margin of than the primarily our over gross our prior cost reported structure was acquisition-related and non-operating Our points XX.X% two due continually to products improving lowering costs. strength and of margin higher proprietary

prior compared expenses to and current for administrative of XX.X% selling sales in year. XX.X% the Our the quarter, were

of in current is prior our $XX approximately billion and both in acquisition-related $XX.X had million, a expenses XX% was interest year quarter. an current all We on and quarter. the quarter. result increase increase SG&A of total average Excluding stock in year expense This prior the sales up non-cash weighted versus year an debt compensation, of XX.X% to

on the new loans to interest per share cash our The proceeds all billion During the quarter tranche caps loans exposure Also hedge existing interest completed of or receivable we to we of approximately hand including and of drew debt on rate our accounts rate term the and of and loans our term were $X.X $XXX swaps special a million $XX term swap facility. C $X.X issuance with to variable quarter, XX% during the repay to securitization used of dividend. rate fund billion entered the our new remains fixed capped. into together

taxes. Now moving on to

rate in effective was prior the the XX% tax to compared GAAP year. current Our XX.X% in quarter

Our rate were XXXX. full-year compared current year recur effective did to XX.X% in rate is prior the year in in to benefits in foreign the not higher year. XX.X% discrete prior the GAAP The due primarily that is that

now rate As entire fiscal accounting option GAAP generally an dividend tax excess share-based to our approximate stock our the for due treatment tax including cash and equivalent payments for benefits, exercises year tax payments. rate a during reminder,

rate adjusted EPS. XX.X%, the use tax full-year is benefits, for we XXXX Excluding tax our effective our the excess rate same

the the current $XX share net Our dividend paid compares of sales. sales the net share payments, last at per the impacted September. the net or prior versus share net loss million, primarily or prior in the due to income to $X.XX $X.XX XX.X% in to year. quarter, $XX which from in operations was per for related reflects quarter $X.XX in current is in by the million, million million, interest expense. year. partially $X.XX per share our period, with EPS GAAP discontinued This or operating million, higher operations in $XXX $XX per quarter acquisition per increased XX.X% The quarter was offset $XXX was continuing the and Net sales significantly from paid of dividend increase The from in income continuing equivalent income or lower increase to share. margin quarter to the loss of costs, improvements net $XX.X operations XX% compared

in or per X% of year-end increased expenses, slightly share, in from Since morning's release our by me discontinued sales growth was increase to the acquisition-related and this Our yearend, lower year X compares to XX.X% related non-operating of is interest EPS The to was press profit Fiscal XXXX was average XX.X% recent expenses XX.X% admin sales of reconciles contributed is $XXX $XXX EPS the year fiscal which and interest year. was to increase a total $X.X rate compared of table was take XX.X% operations sales fiscal let billion excluding Net gross a the up up X.X%. compared summarize compensation of year XXXX about increased items average of Selling of $XX expense of last X.X% X fiscal $XX.XX year. Net Please last higher $X.XX an excluding billion cash the adjusted per selling to minute XX.X% in and improving was EPS XX.X% from GAAP in weighted The primarily and XXXX. our X% than EPS. million, prior to stock $X.XX sales this prior significant increased in sales for of sales, year. X% the SG&A $XX.X prior million, Again, sales This approximately all share acquisitions. million higher $XXX of year. to $X.XX SG&A expenses, LIBOR share, result the for margin quickly points. our million our per the some and about year, organic debt of in to XX% from adjusted average $XX.XX in to X.X%. is last year. versus billion was in year. from sales the compared revenues. full administrative of Acquisitions Adjusted XX% expenses Reported increase year. weighted over was billion rate reference the $X.X

credit cash company and balance liquidity. revolver and The have year million the undrawn us EBITDA X.X cash activities. our $XXX and leverage of the year under company's to net available TransDigm approximately and times cash times to was our pro-forma shareholders. debt good gears our on sheet for million We of capacity switching year liquidity basis. billion $X EBITDA year a XXXX generated the and our ratio agreement. with end X.X of pro closed was operating Now, gross at over another of $XXX from with The Fiscal the on forma

As we be previously XXXX, the midpoint estimate be fiscal estimate EPS GAAP look Nick to EPS our $XX.XX. adjusted the of we year mentioned midpoint to as forward of we $XX.XX, to our

rate this sensitivity to $XX table compared in average LIBOR reflects a year is for As we disclosed an materials to XXXX. and LIBOR rate to our approximately million million estimate on includes million average expected QX completed there assumes analysis and X.X%. Depreciation fees. debt approximately the slide is This issue of of This costs of both we be be in morning interest in provided $XXX interest to you yields is EPS. fiscal and EPS In XX, $XXX bridge the adjusted estimate cash which million full are amortization XXXX. expected in on year GAAP around $X.XX X.X% then the cash that approximately financing weighted the adjustments and $XXX to to can of rate. use amortization an fiscal year do Interest interest rate sensitivity expense

$XX our approximately or an after would example X%. as around to million an interest tax increase rate under increase X%, LIBOR weighted on average if interest basis. would to This $XX X.X% increase just to expense were million, our Just by approximately

as be rate adjustment with GAAP recorded expected we is they a and discrete XX% exercises benefit stock are EPS fiscal is reduce option that predict, year XX%. difficult XXXX but taxes. year is estimated Our the equivalent around through in in our quarters as as the fiscal effective timing main dividend for will difference the options and payments, tax between The The along occur, the GAAP will cash XXXX on exercised. rate XX% to our adjusted rate the tax exercises of rates to and be

there shares assuming We XX.X million year. expect will the slightly, our increase average shares outstanding during weighted buybacks approximately occur no very will be

we of leverage, capital the adjusted liquidity EPS In an our these of X% to items, of regards approximately than a result billion As estimate This year acquisitions fiscal sales. XXXX. around market of $X.X on and at billion of transactions, for cash expect includes year assuming CapEx additional our or XXXX. X% $XX.XX and our is $X.X hand to around fiscal no of have greater end

other acquisition our will We currently Defined of XX, at As activity times make X.X Assuming to capacity XXXX. billion between ratio grows steadily a Q&A. $X over up times the September discuss have for additional $X adequate net other without X.X be EBITDA to no leverage our a and equity. items over open capacity issuing year also we like before proceeds. billion couple as I acquisitions would to This

As you released House Ways week. tax all a Committee and proposed Means know the last bill

We are the currently progresses evaluating there through process. as and we be it will changes know congressional that

is tax materially would level high analysis our indicate preliminary change from would today maybe and not slightly it rate cash Our where lower.

expense. term-loans the in some for trading to have are par stages beginning reduce been and interest Finally, of our a we term-loans our while of our re-pricing above

We it sense as makes go-to-market. only proceed will if we economic

an provide over Liza an and we that Q&A. we'll data. now, I'll full for guidance interest our year update With this to endeavor, hand As it finalize to sensitivity interest updated

Liza Sabol

ready to Operator, the Thank open you. we're lines. now

Operator

from from line open. is the Research. comes line now question your Melius first Our Sir, Carter gentlemen, of and Ladies Copeland

Carter Copeland

morning. Hey guys, good

W. Nicholas Howley

the new Hey. firm. Welcome to

Carter Copeland

that to evaluation pretty the had fourth in then there. definitely north you the business you clearly just I pretty SCHROTH, – Nick. obviously, Because view what mean, DoJ begin with? in belts. Hey, you for seat questions just that share market AmSafe have in wondered, response to what Two you I changed has have in when up guidance, XX% like thanks. the the it One, were in changed was quarter. you And or I evaluation Thanks, there. with bought which looks coming firm of a already learned freight to mean, that high a the a it, you. the question that the second XXXX you of guide. portion had it must relates

was that. through which would would something guidance significantly into next in So, assume one-time that carry was because there year's that, below I

So just together? square those trying Thanks. to two

W. Nicholas Howley

Carter. Yeah,

the talk then don't Kevin, and thing, you about me talk after we get done about Let why the freight here. SCHROTH this

thought HSR the we require an it. we from took a Essentially before through I don't someone it market deal We was the okay. restraint the day it, decided with them the way know just uniqueness we thought that The we move agree of analysis to they the segments. though, at went it I as that out, on. defined was and in of of view of size I'm but more the and the the bought view, we this thinking it As dragging said of sort this it end situation we and didn't to review. DoJ world, worth sell the probably the given wasn't question different just prudent started contacted

Carter Copeland

Okay.

W. Nicholas Howley

how That's it about. came

Kevin M. Stein

Okay.

W. Nicholas Howley

Kevin, on the freight.

Kevin M. Stein

freight. on single-digits On XXXX freight, commercial transport to forecast the for year mid we fiscal high

extent looks mid strong piece might very in have we're what and sector but a catch non-proprietary is had that we been remains the to as think freight we QX. I participate concern right, will and being XXXX conservative that. for of good forecast I up, But us pretty to clearly the high. in suspect that important You're an some

Carter Copeland

business much non-proprietary Kevin, piece? is how that of that

Kevin M. Stein

the It's a reasonable business. chunk of

Carter Copeland

Okay.

Kevin M. Stein

disclose size. aftermarket. of individual but it's pieces, a XX% that reasonable reasonable So, don't it's We the chunk commercial the of a

W. Nicholas Howley

But, just I think to clear. say half be to it's not

Kevin M. Stein

not Yeah, it's half.

W. Nicholas Howley

half, but, not yeah. It's

Carter Copeland

guys. Thanks, Great.

Operator

Sir, Deutsche Walton of from Our is next now Myles line question comes from the your open. line Bank.

Myles Alexander Walton

Thanks. Good morning.

W. Nicholas Howley

morning. Good

Myles Alexander Walton

one a really clarification. First is

cash I you a new puts of and and bill. a takes net didn't from the pieces basis XX% rate you the cash Is think drop that to tax would a you corporate including that after change under inclusive XX%, get still rate anticipate tax benefit? said various tax the net wouldn't

Terrance M. Paradie

we Yeah, at position our Myles. – on I is said where as XXXX lower. and just that to right. we think new be tax what to That's meant looked say today to think fees clarify I will recast What I maybe slightly the similar or we're the very on at cash

obviously, to an limitations us, the income us. is is, taxable impact interest the rate deductibility beneficial So lower has rest of to the what's but happening of the on impact the

rate from be about going at standpoint. we're think today to we're right where we So a

Myles Alexander Walton

one-for-one cash said in EBITDA. the operations, from then on one, you the almost And a incremental Okay. fiscal for a just million match $XXX other that's clarification, It's XXXX.

a you tax or cash into working benefiting So move from you a what is as XXXX either capital basis?

Terrance M. Paradie

at cash I we're think looking operations from – a from it's $XXX million.

I CapEx costs think range interest million to And that's for around so up. flow go free in the cash then the before. of in should our from mid-$XXXs is our a standpoint, rate the of took number We'll see we low-$XXXs year. is tax cash million the X% going be be We're the to that sales, some consistent.

other So I'm growth anything unusual to you. be our honest seeing with not the than EBITDA in

Myles Alexander Walton

your interest a of it's obviously usually, you've to cash higher but mean I usually operating one-for-one But XX%. about conversion Yeah. and is flow growth EBITDA got

it's So better I'm just a I mean curious, capital obviously performance. working

Terrance M. Paradie

drive benefit XX% think little be expense that this going on take were but to bit we year we little the are bit is interest down working a to Well, it'll it. going year. that where of a this the will – I see capital conversion, from And then

Myles Alexander Walton

a And are have going to then comfortable scrubber harder anything then just Or on that? you forward? pipeline I one-off timeline, ability the for a last of And bit situation? in is that you put your a what's little a there is to this the of SCHROTH. Nick, is backs in statute how limitations, mean past? like Okay. one the do for deals deals a there look kind

W. Nicholas Howley

unique what back is situation. – don't so pretty a Myles, idea look rule I I'd is. no I But this would – the Yeah. just – I have

you We our – it's of position at to compared restraint significant in sort look we products. unique overlap anything. market, seatbelt other buy If our you look see rarely when the at pretty the if

of I thing. is a one-off think kind this

Myles Alexander Walton

Okay.

W. Nicholas Howley

know don't heard about no the I anything of of haven't one's said any exposure Surely in I it. back. any,

Myles Alexander Walton

Yeah.

Thank right. you. All Okay.

W. Nicholas Howley

Okay.

Operator

your comes Our Herbert the line Ken open. Canaccord. of now next from Sir, is from line question

Kenneth George Herbert

just Hi, on follow-up good that morning. comment. to Nick, wanted I

hasn't that fair opportunities? you impact or any of look to assume had it SCHROTH sort is potential So on as M&A your activity at or screening

W. Nicholas Howley

far, so say and a not I has business. and buy would probably – unlikely try it's seatbelt don't It we'd I

there. Fortunately or out hardly are any unfortunately, there

doesn't usual. it's But it as business much So matter.

I situation. position market here unusual set the of There's very said, facts a As is substantive in here. sort this a we of have

Kenneth George Herbert

I appreciate can to I follow-up. just No, Okay, that. wanted okay.

second pipeline. with M&A comment forward, off ago. placed on question of sort in I of priorities looking, are years commenting different picture of moving as terms you call broad look would the my a in on started of the we fairly just you then at the it that aftermarket? availability OE And that that markets might the changed are defense when seeing Or anything that, M&A you you're that on part activity? looking look as at of expect is might explain a you sort you enabled activity any on still You particular either part the front? or in perhaps you be, of of a guess versus some normal But should commercial, robust assets just lumpiness lower the have environment recent few have

W. Nicholas Howley

in me, think a XXXX did. lot lumpiness. wasn't whole the there tell say size we most can talk to sort normal it's I I people in I of

there mega-buy. course, Of one was big

than stuff see. Proprietary aerospace, we defense used now to Our would I say significant aftermarket. see criteria hasn't we changed. more

were. had know, defense more Just to it try inclined stuff than as that want that probably it higher to sell defense are And now. holding are people valuations been you they and sell

was reasonably close sense heavily than ago. they'll it's activity, look no years, and just But it predicting or the the number us. of have So way say the make is I of two how if things of they'll of the will you weighted sort at list that's towards more we've defense list things see, looked three to robust. whether I maybe whether years probably we at,

Kenneth George Herbert

be market just whether And commercial? your changed, Okay, hasn't finally, it by or great. defense preference for assets

W. Nicholas Howley

think I I so. don't don't think so.

our PE you that. are those which know kind the we know proprietary, significant aftermarket, requirement, mean, how of screens. big, big define return, You I

Kenneth George Herbert

All you Great. thank very right. much. Well,

Operator

of McConnell RBC Capital comes question next from Our from Markets. Matt the line

Your line is now open.

Matthew McConnell

morning. you. Good Thank

W. Nicholas Howley

Morning.

Terrance M. Paradie

Morning.

Matthew McConnell

M&A else? criteria? Just buyers, missing to meet is a were properties you're interested your out follow-up quick the in on something you any question. whether it Or not price you that you're Are other that seeing seeing or real ones on just that go just

W. Nicholas Howley

never, wanted look good – that I Matt, wanted don't things we we after, can't in I didn't we basically that to says buy. we we see say but that to last go just hate of to the that through any of – wanted Yeah, get, think which I XXXX, didn't anything, magnitude

Matthew McConnell

Okay.

W. Nicholas Howley

we wanted is. A say what company it question. think not That's I buy your we that got to answers I not and wouldn't that – it's outbid.

Matthew McConnell

Right.

W. Nicholas Howley

that. seeing not We're

Matthew McConnell

Or defense Okay, could markets with Kevin, okay. then, a market? I if that year? of pretty And guidance what's of a assessment in that lot on and It there's what's defense the had your you're now. square low-to-mid activity your next visibility Got And for optimistic visibility the being you there, like right don't side? conservative you it. know seems on outlook. Just the growth single-digit

Kevin M. Stein

the like activity. external there's there impact ranch, we the is a predict. requests with defense. quoting of that activity But, quote. of think There factors but it's lot appropriately And to There budgets be difficult for conservative. try around lot a and yeah, is I to is always good always

usual. that lumpy is in So be with low-to-mid stand digits it, we Again, versus can visibility single we have. hard our historical to up And guidance, with higher defense the and things business than the the where predict. that's

Matthew McConnell

Thank you. Okay.

Operator

Sachs. comes Our next of line question from Noah Goldman the Poponak from

now line Your is open.

W. Nicholas Howley

Hello.

Noah Poponak

everyone. morning, good Hi, Hi.

W. Nicholas Howley

Morning.

Noah Poponak

the Sorry, looks revenue classic at light of given define organic. of put you be kind sort so choppiness imply of guidance contingency It's of in this I'm some extra experienced pace the the decided of year, to at the to year. wondering, guidance guess, just low-end market and the you very growth. long-run mistake. some I'd to X% little really a company. mute-button of to normalized total for I end last if to your things you each X% have Nick, of kind revenue X% be how

W. Nicholas Howley

another way right, in is you think guidance, in our the revenue. guess asking that of I do we're conservative

Noah Poponak

to Well, you normal. guess is I always whether I incrementally so the so you're are, know actually question compared

W. Nicholas Howley

we're surely Well, I don't to how but to know that aggressive would guidance we we I think that answer don't give give, say because extra here. want we

Noah Poponak

Okay.

W. Nicholas Howley

another giving guidance end it up I'm no, to Otherwise just I'll going number. that. leave Maybe

Noah Poponak

Yeah. I... I know,

W. Nicholas Howley

aggressive Hopefully these don't we in ranges. we're believe here

Noah Poponak

like, approach enough. with nature the That's unexpected appreciate some of what in guess took year more sort I after last the (XX:XX). you the but of was Okay. just I different the if of and rest fair question happened things aftermarket the any the

W. Nicholas Howley

X.X%. last The growth, was the about I year think organic organic

Noah Poponak

Yes.

W. Nicholas Howley

organic This now... is all essentially

Noah Poponak

Yeah.

W. Nicholas Howley

So year-over-year. there's no almost acquisition impact

Noah Poponak

right. Right,

Can in Okay. aerospace the and quarter how aftermarket tell the commercial for in XXXX? you both compared revenue orders defense year the us the to aftermarket and

W. Nicholas Howley

the didn't in don't about year, see (XX:XX). I talked the you quarter just you? Kevin, them

Kevin M. Stein

Yeah.

total aftermarket business defense your versus... defense or was question on So

Noah Poponak

Yeah.

Kevin M. Stein

Looking at back...

Noah Poponak

Basically to trying to get revenues bookings book-to-bill... a compared through

W. Nicholas Howley

book you're book-to-bill... – a no, a asking like like mean You

Noah Poponak

I'm in would OE few times and yeah, had you ratio, it if Book-to-bill defense aftermarket, for well helpful, aftermarket a the as past be I and too? defense commercial you've curious specifically for given think which that

W. Nicholas Howley

Let me check.

book-to-bill it's If the pretty X.X. the you above defense took middle. a it's the up but aftermarket of say modestly. say book-to-bill would in is commercial I in would X not in It's I the kind

Noah Poponak

Okay.

W. Nicholas Howley

take... commercial the And flat about you OEM if probably is

Noah Poponak

are numbers? those XXXX And full-year Okay.

W. Nicholas Howley

get numbers quarter might the They but That's all Yeah. wouldn't I wouldn't quarter, book-to-bill. fourth in bounce you I much And around. bookings. – different a worth of from draw slightly

Noah Poponak

wouldn't you're the just the year, how compared to for I've correctly one you agree. year. that button else last then the to looking divesting But hearing year sure helpful that I but I anything on to divesting else? to know, anything for this exiting And it Am make anytime soon? expect up You correct? for me it's Is actively not sometimes I just helpful that's Yeah. at know myself currently SCHROTH be you're situation.

W. Nicholas Howley

we're business the future in we we not couldn't now, some didn't point Well, right divest decide of anything at surely, That's divest. as some looking else. to we could to not like, we say

Noah Poponak

different for Right, a reason.

W. Nicholas Howley

would presently our divest in which would else. be of the queue anything decision any don't that. it have us to It with that do we do do SCHROTH to purely to Nothing make

Noah Poponak

it. Got

W. Nicholas Howley

nothing... is there But

Noah Poponak

Okay.

W. Nicholas Howley

know like or that anything ...there is DoJ that of. or no we bleed across additional activity

what you know Of never don't know. course, you

Noah Poponak

Right.

sure Just wanted to make of that.

thank Okay, you.

W. Nicholas Howley

the I there. you Yeah. story No, we've no, think given whole

Noah Poponak

Got it.

Operator

Our of SunTrust. next question line Michael Ciarmoli comes from the from

is line now open. Your

Michael Ciarmoli

morning, Hey. questions. taking for my Thanks guys. Good

W. Nicholas Howley

morning. Good

Kevin M. Stein

Morning.

Michael Ciarmoli

SCHROTH? trying SCHROTH, just run be for to what at you maybe tracking of one would the us sort on rate calibrate... to give revenue Nick, Just last was willing of kind

W. Nicholas Howley

gave you it. out what we of think came I

I think of you we what out it... gave came

Michael Ciarmoli

Yeah.

W. Nicholas Howley

we how it. months figure ...right. many Then you can had

Michael Ciarmoli

fair. Fair,

Okay.

W. Nicholas Howley

but in sure not I'm linear, you'll exactly ballpark. it's the get

Michael Ciarmoli

Okay.

any around Just I bottom else add? weakness down color we've weren't the or the this a new acquired And last interior being you quarter of big kind was going tied it there. any of comps. about just you can year have that's out range Do wide-body any mean to activity pickup that like mean think hit you seems think some there here. still We're opportunities. of certainly weakness some really you may some interiors was But just it you're on were fairly could anything be retrofit mid-teens. elaborate. – of think like to finished challenges, two the you I guys mean guys seeing you certainly it in If seeing it other I down easy the I some sounds I market, bottom. talked – the

W. Nicholas Howley

some them of the the campaigns Certainly back appear had the more gone others, had of had last in around work slowness lull would gone that being lot I A guys that were than with really it a was through specific over couple seen we years. to a but that on of interior And it acquired. lot activity. trace rebranding don't we

step-up a in to flat forecasting down I that's asked largely our to this The think amount, we change are is up all to but us. question to market. we from go we trust that the teams as anything discretionary was through small peaks and our what interiors earlier, the a did guided valleys flat-to-low do in in It the they coming. indications of the followed But teams. they process. same collected business. true is and a lot see didn't see as XXXX our We a we slowness uptick on we've interior It numbers, process go

color I the that's So give can that you.

campaign happened. indication as at is expense, changes someone real that the looked in we and of share, have like cleanup We their and there particular generally that changes worked fleets. there with, any market scrubbed marketing we anything these customers that with, that It's many just didn't general our at no have did were work to

Michael Ciarmoli

on for a aftermarket overall have of That's of the lot see narrow-bodies, we're it. granularity guys And about provisioning into as then of level you bit to just some peers of talk a tailwind helpful. seeing levels Do view, move even be next elevated of your AXXX. provisioning year? little that Got new the a the we

W. Nicholas Howley

No. figuring on We're not any provisioning.

Michael Ciarmoli

Right.

W. Nicholas Howley

be see tailwind. that'll you If some, a

Michael Ciarmoli

Is mean value obviously an of I of last runway It EBITDA XX%. at margin I to there just for guess pushing high. all one companies. would that to creation mean, aren't would up Okay, seem there. a have changing okay. is the margin? all-time acquisition-related here. thinking Fair. any be for EBITDA you I And year going the mean you then me close dilution little for what bit more not I for the sort acquired story are long-term there? like the any that

W. Nicholas Howley

we that reason I it's there, or don't the buy know, down. It's it's the is that, think pushing to the you'll unusual or mix stays there buy I and a year. much so same, XX%, mix like sort it grind up of or pickup been is pick-up, it Well, a we don't up something something averages if in point And it'll XXXX. didn't shift there before very close that it'll because no

Michael Ciarmoli

right. Right,

Kevin M. Stein

any value of stretch. by of go not forward. plenty in is we as the approaching there think that drivers still end I juice But our We're

W. Nicholas Howley

Right.

Michael Ciarmoli

right. All it. Got Great. guys. Thanks,

Operator

the from next comes of from Seth Seifman Our question line JPMorgan.

is now line Your open.

Seth M. Seifman

and Thanks morning. good very much

would a place there the ask where go margin just pace? at or of way. slightly say a towards that are point the different you and the XXXX we're the driving the margin – where about you've XXXX that margin you still of Just and at the bought Are target at X of that target year any company to course in over that sort that is businesses question whole you're now

W. Nicholas Howley

Well, at to XXXX move all. needle the enough isn't there

know their go they're bought would But out, marching to quite I overall of along answer going very The small you but primarily their three we see get Breeze along DDC, and to all marching don't they're plan. And planned along product lines. them. reason we take relatively which fine, irrelevant XXXX the won't still I if how couple say nicely to – those to a So are question. we They're against plan. no nicely all they where think acquisition the to margin. be is against businesses businesses

we Breeze total, think the all businesses as I a they it rest margins that as and not stabilizes as that's may we way it look value about DDC, margins when the get company bought up, do TransDigm and run quite of year. drivers with in point you like far X we a said businesses, the out, a the if move the

Seth M. Seifman

Right.

then follow-up an increasingly of less on sort if you IP up seed And efforts that they dealing how are that in more been coming to supply against the all. it? you making have are base, at And with heard so about aftermarket, I to Boeing the just probably have question intentions shy lot Great. old think, about theme, us and in obviously Okay. a of

W. Nicholas Howley

things any. that. across not to attempts have much. come We or anything like that. you seen extremely we had read not be take far any aftermarket, same the so We the resistant We've to We In haven't read. would IP we our –

a lot. We haven't seen

distribution fairly Now, aftermarket, we we're customer them business. significant their a Boeing's for to – for Aviall

So, we some – get way they from us. that contribution

Seth M. Seifman

Right.

your just conversations with in products... your engineers new them, sell But sales looking Okay. to when are

W. Nicholas Howley

we with least, service, right. hire to At distribution supplier. mean, provide us them I Yes,

Kevin M. Stein

that's it. the way Maybe put best to

W. Nicholas Howley

it backwards. got I

Seth M. Seifman

effort seeing new insert of to their part trying greater more you're And then sales sell Right. products on sort them to when are engineers a your of to their IP?

Kevin M. Stein

seen. Not that we've

W. Nicholas Howley

we've Not seen, no. that

Seth M. Seifman

much. very you Thank Great. Okay.

Operator

Our of Sheila next line Jefferies. the question from comes from Kahyaoglu

open. is line Your

Sheila Kahyaoglu

Hi.

W. Nicholas Howley

on Sheila? name, How did do that he last

Sheila Kahyaoglu

Well, I'm by it used to now.

growth for another So, on question you guys. EBITDA

core your historically – done is to line midpoint this you're year. you've is the because at with what growth think, I X% in is a that sort clean guiding

Just wanted for to EBITDA of of finding ask you existing high about margin. very are obviously the take have out the What sort additional you a opportunities business? productivity,

Kevin M. Stein

XXXX We productivity. for things, for forward of those as for of a don't a various those productivity, provide acquisitions that be love lot line For commented, – into we those do looking manufacturing of maintenance, opportunities, we nice that product do some consolidations. around improvements facilities. still they in see but we did some footprint. number – moving to as I and we our I some some as We're plant the will briefly routine well always the of in rationalization and opportunities yeah, going those limited think, opportunities There'll

even deck So, opportunities those I capital and that along yeah, there that the in say productivity to as in long continue are have as find the productivity drive our with a the we is number spending fold for ever around those been ranch. for businesses would a vibrant to of time. projects

Sheila Kahyaoglu

Great. Thanks for said that supplier I just on last one any RFPs color, platforms. another for know they're market then dynamics. opportunity in increase more, noted of just the And if They that content for in to an seeing is changes night that, some just wanted TransDigm? seeing Kevin. existing you're an

Kevin M. Stein

the I sure again, I'm not that question? Say followed

Sheila Kahyaoglu

opportunities platforms. They in RFP noted of they're that on seeing a higher commercial because content pickup existing

Boeing to Airbus outsource takeaways some decided in-source. and – as So,

the... of is you, wondering of, just that, seeing So, any I that was benefit if for you're a kind

Kevin M. Stein

No, we haven't.

W. Nicholas Howley

No.

Sheila Kahyaoglu

(X:XX:XX)

W. Nicholas Howley

seen that, for not sure. We've

Sheila Kahyaoglu

you. Okay. Thank

Operator

Research. Robert Vertical next the comes Our of question from Stallard from line

now is open. line Your

Robert Stallard

much. so morning. Good Thanks

W. Nicholas Howley

Rob. Hi, Hey.

Robert Stallard

Hi, Nick.

highlighted due have you pulling you're the made your of buybacks the buybacks You more stock of price. in in to forward. some How feel feeling you it that that going sort volatility maybe you review suddenly past? done year in comfortable do Is than would share in year the the that

W. Nicholas Howley

look good just opportunity. acquisition at probably I if call year, against just a we'd acquisition. this did $XXX shreakingly mean, close when look acquisition, what We I buy we the it's we make think, I them million-ish. it's But at an like somewhat become an buybacks. million-ish, -- sorry,$XXX earlier think, if they they Well, bought

Terrance M. Paradie

Yeah.

W. Nicholas Howley

stuck Rob, investment and if bought us. if have. It's with we period capital our blackout much, were for XXbXfiling,we'd have that the decision we in a could we probably allocation were twice

Robert Stallard

Okay.

W. Nicholas Howley

shares We like don't any even the something or that. have like rule hold

Robert Stallard

been has drama referring issues commentary about and any all about in earlier were defense raised? The And these there Yeah. – the from feedback yeah, fun. that to year back customer, that DOD the the the

W. Nicholas Howley

– common audit audit. agencies, IG is Well, as an a is the the the industry. you know, we of or There which in pretty IG started – not down buying we

one time – They just and just of industry That's years. few it's you almost a the the to these everybody the sort gets complete, on moving every of moving long down website, If along. it's take in track. slowly

Robert Stallard

Okay. a And then just one. final

the this impacted On ever Is TransDigm? seen this first happen the time has acquisition front, you before? DOJ have it

W. Nicholas Howley

first – or a about Hart-Scott-Rodino a that a from have one I we on back guess, have stop be ago. and We time well, it's we needed read into four buy three something Goodrich No, to years filing had the years in question.

Liza Sabol

wasn't... it But

W. Nicholas Howley

we it five was stopped years ago. by probably it – Yeah. don't But DOJ, we we This don't – was the frankly that but was. quite don't why, know but

Robert Stallard

All right. Thanks.

Operator

comes question line next from from the Research. of Our Hunter Keay Wolfe

open. now is line Your

Hunter K. Keay, CFA

much... getting you to And evaluate, and Thanks call. for the define me – on Hi. value good your to a how Nick, How use how shriekingly buy? stock do do what metric you

Kevin M. Stein

it. he sees He knows it when

Hunter K. Keay, CFA

mean... that's use, is triggered actually that's a mean, to there I I you metric – like Yeah.

W. Nicholas Howley

mean, we should when Yeah. own I we view buying. of have our be

like, of XX% kind something bought And we early this we it looked at XX%, IRR a miles at I see $XXX we You the – was or the stock see things here. we're and bunch saw of year. said, off, you mean, $XXX. that in is unless a

Hunter K. Keay, CFA

Okay.

W. Nicholas Howley

Obviously, we're the it. heavy we way there, buyers in at I look that's mean,

Hunter K. Keay, CFA

okay. IRR, With

W. Nicholas Howley

– up looking looking not it's to good, up we're we alternative in getting When on we to the When acquisitions buys, acquisitions. pretty when put over equity it's in making return, to good that's our XX% – it's but on it mid-teens look us. the there, returns them. more gets Well, at shrieking closer for it's

Hunter K. Keay, CFA

Okay.

W. Nicholas Howley

way thought to us we the going acquisition returns $XXX that at not see again, say I'll Whereas any this we're does. to

Hunter K. Keay, CFA

Right.

you it So basically. see it you when know

And supply make then And a do helpful. long-term the push cost up Bombardier agreements in event the content place savings? protect general? with the in you that brought chain on CSeries much they sort some in have down yourself you remarks, renewed in That's pricing of maybe program to you them for that prepared content. or how Can talk have you Okay. significant about with

Kevin M. Stein

long-term would agreements in business It's I by say but place. do agreements We long-term have do different business, have we place. in

significant many another, participate. It's in TransDigm program differences for and is don't get all content higher. significantly one to groups our program a the of We versus into but it's want to Our a bodies, great current of narrow difference.

Hunter K. Keay, CFA

Thank you.

Operator

Our next Khanna question comes from from the line Gautam of Cowen & Company.

Your line open. is now

Bill Ledley

This good of Boeing. Bill on for follow-up a Gautam. around on to morning. questions the Hey, is couple Wanted

renegotiation said couple – is I you of your PF think, starting year. this calls a ago PFS

watchful where for there's So just with if we year? the you that? And anything wondering should are throughout be

W. Nicholas Howley

say any the I end say year that to there's moving in and at XXXX. slowly I out slowly, want starts. contract of mean, I mean fits calendar of, the particular acceleration. sort can't it's I forward, runs

Kevin M. Stein

Yes.

W. Nicholas Howley

that Is right, Kevin?

Kevin M. Stein

Yes.

W. Nicholas Howley

end. right up these Usually year Calendar XXXX. to the go

Bill Ledley

And Okay. Boeing you seeing different still in to any of rounds? out behavior early tell? these is Or are too it

Kevin M. Stein

the no in ago. regular to on seeing predict round but The working put this all We're will teams difference to a this behavior versus difficult basis, several when bed. be details. one meeting original it's years from are We're through the

Bill Ledley

your value back what going in these deals any just Or then sort on to ability acquisitions XXXX. in Have post to is thought? you with M&A of pushback you price line been with And hikes? M&A a the Okay. generate seen question

W. Nicholas Howley

recent – right, not fine. of – are No acquisitions or change versus We've seen versus dynamics total, comment are price – cost material the haven't nicely price We right the the the expectations. the change. I any say in been in in our industry. in line running going we're in least ahead two most in to And I'm total, are dynamics ones are would substance at but

Bill Ledley

SCHROTH. just And one on you. Thank Okay. last then one

buyer or You mentioned buyer? financial a a up. had lined a this you strategic Is buyer

W. Nicholas Howley

the buyer don't it. I closing we're to identify until want Well,

Bill Ledley

Okay. very Thank you much.

Operator

of Our from Drew Stephens. Lipke next question comes from line the

Your line is now open.

Drew Lipke

in me fitting for here. Thanks Hey.

dedicated think was mentioned piggybacking at channel that channel terms in and If Just interior thinking consolidation of impactful sales that the on and the look we've the all for trends there has business and a interiors earlier. question with we about standing Airbus seen that at interiors? the the up about been their services just division, from there

Kevin M. Stein

I any guidance the dependent. what refurbish it's but much a the OEM want that wrong, And any the so timing. on isn't seeing are decision. could how just teams there. not is teams have a I'm It's very real change. discretionary there be the changes from really not to I It's

Drew Lipke

the last mentioned business the seen have in growth. jet a lot if business then aftermarket, aftermarket OEM and it's we the of And OEMs and hard determine you strong the and over what's posting in we X% flows And And pretty U.S. past Europe are up XX in jet it utilization Okay. think just that X% months. the channel through. about given what's to that

– so within change in sales aftermarket? given more you And through what's flowing I'm that have seen your bizjet And the OEM? has curious of maybe bizjet, part a channel impacting the that's

Kevin M. Stein

I don't the business always think through OEM. The so. aftermarket flows for jet

there a business have So XXXX. degrees of varying happening. we I forecast as up for flat visibility to but into and what's see jet to it market love more, would we helicopter

better, to alluded maybe I market, a a great helicopter believe. think, business be bit would I but not I it little offset jet be by would

start So, that you discussed to is that we're seeing far that. wrong the it, hit come but so you what and eventually lot a that. be love ourselves we bottom not amongst see. of to I of that out would about We've

Drew Lipke

Okay.

So as the like about, of think, interiors? of impactful flesh more sales don't with they've impactful distributing I through or of say, with been Aviall, you had and some Whippany to has think you fair instances that through your Aviall, a on been Boeing Aviall, like jet and business channel think mentioned lot we hasn't go where terms pound in required you

W. Nicholas Howley

so for way distributors OEMs. business in for don't all. that the you or through Aviall jet, not anyway, at we We Satair, go markets big those No, through know, don't goes largely distribute that the

Drew Lipke

Okay.

W. Nicholas Howley

go largely direct. interiors And

Kevin M. Stein

direct. Go

W. Nicholas Howley

Yeah.

Kevin M. Stein

the to Direct airline.

W. Nicholas Howley

Yeah.

Drew Lipke

to in if for alluded the right, the one, scope here awards. ability certain being much it potential you Audit, Inspector TransDigm you for your I'm terms the curious thanks. audit? to memorandum, General that but at procedures a previously states is only I just broader of comments DOD objective. And us contracting the just on more could the just All And look of reconcile limited, your Okay. know, focused audit comment last regarding

W. Nicholas Howley

had reconciling. what read see of the to for the on don't that. and These me other I answer know the hard before seems -- we've to be following and the website. I'm path it these when IG It's ones I path, same kind I same

Drew Lipke

Thanks. enough. Fair Okay.

Operator

questions And further for to any back Sabol remarks. like would I turn the showing no I'm call to currently and now further Liza

Liza Sabol

call Monday. you. you again Thank as morning's participating for this XX-K our on Thank reminder look for and a in

Operator

thank the great and Ladies does day. in concludes disconnect. a you and for participating today's gentlemen, Everyone you conference. This have all program, may

TransDigm (TDG) 9 Nov 172017 Q4 Earnings call transcript