Release Date: February 04, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: In the first quarter, margins were expected to be down sequentially but were up. Can you comment on that and the contract loss amortization? A: Sarah Wynne, CFO: The higher EBITDA margin was primarily driven by a significant mix shift from commercial OEM to commercial aftermarket, along with productivity projects. The contract loss amortization relates to contracts acquired with Esterline, which are still lumpy as they flow out. There were no new contracts added, just timing differences in Q1.
Q: The guidance implies flat EBITDA margins for the rest of the year, despite usual seasonality. What would drive this flat margin? A: Kevin Stein, CEO: Acquisitions are averaging down our margins by about 1%. The first quarter had a special situation with the strike and OEM being down. We aim to be conservative in our forecasts, so we might appear conservative once again.
Q: Are you surprised by the commercial transport aftermarket performance, given the growth in seat miles and pricing? A: Kevin Stein, CEO: Some of it is due to comparisons. We're up 33% from Q1 FY23 in commercial transport. Freight continues to be a drag, but bookings were up significantly. Our engine businesses are doing significantly better than overall numbers. It's slightly better than anticipated, part of the lumpiness we expect in the commercial aftermarket.
Q: How do you expect the aerospace aftermarket subcomponents to improve to achieve low double-digit growth for the full year? A: Joel Reiss, Co-COO: We don't provide specific guidance for submarkets, but we expect freight to improve and the interim business to continue doing well. All sectors have good passenger traffic and an aging aircraft marketplace, supporting growth across submarkets.
Q: What is TransDigm's exposure to tariffs, and what contingency plans are in place? A: Kevin Stein, CEO: TransDigm is a domestic manufacturer, so tariffs have minimal impact. We don't import much for manufacturing. We've relocated production out of China where possible. Tariffs across the board will be de minimis for us.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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