TransDigm Group Incorporated (NYSE:TDG) Q4 2023 Earnings Call Transcript

Mike Lisman: I think it’s conservatism and noise level deviations. We round a bit when we give you guys those things of about a percentage point. It’s not exactly a percentage point. I think it’s a little bit ahead of that. The business is performing well, though. As Kevin said, it’s at least as good as we thought it was when we bought it, maybe based on five months of ownership a little bit better. But you don’t really – as you guys know, with M&A, once you own something two full years or so, you really know it and understand it, and we’ll know where it’s headed. But based on what we see so far, it’s looking good. And then those – the dilution amounts, it’s a bit of rounding here and there, but it’s noise-level stuff, and it was, I think, a little bit above the 1.0 percentage point mark, which is what’s generating the 1.0 percentage dilution coming this year in FY2024.

Seth Seifman: Right. Right. Okay. Cool. And then maybe, Kevin, on the CPI deal, kind of it seems consistent with some other stuff that you guys have done in the past. But I think that kind of since the pandemic, you’ve talked a little bit more about being focused on commercial acquisitions. And not necessarily looking to increase the defense portion of the pie through M&A. This deal doesn’t really change the pie that much in terms of its size. But are you – would you say that you’re more agnostic now in terms of commercial defense…

Kevin Stein: No. I think we would still prefer – we would still prefer commercial businesses over defense. Commercial businesses aren’t as lumpy defense businesses can have. It’s difficult to forecast the revenue. So we would still prefer commercial. You can make a better return on a commercial business. There’s more revenue growth on and on. But you can only swing at the pitches that get thrown at you or thrown to you. So this was the business that was available. And when you find them that meet your criteria, again, proprietary products, highly engineered, access to aftermarket, in this case, significant 70% aftermarket phenomenal. You love those businesses, and they’re important for us to acquire. So yes, we would still rather find great commercial businesses, but defense businesses can also meet the criteria.

Seth Seifman: Great. Thanks very much. Appreciate it.

Operator: That concludes today’s question-and-answer session. I’d like to turn the call back to Jaimie Stemen for closing remarks.

Jaimie Stemen: Thank you all for joining today’s call. We appreciate it. This concludes the call. We appreciate your time, and have a good day.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.