TransDigm ‘comfortable’ with 4.8x debt ratio; no plans to reduce debt

By Devika Patel

Knoxville, Tenn., Nov. 10 – TransDigm Group Inc. brought its net debt-to-EBITDA leverage ratio down to 4.8x from 5.3x during the last quarter and management says it is comfortable with a ratio in the 5x to 7x range.

There are no plans to further reduce debt.

“At year-end, our net debt-to-EBITDA ratio was 4.8x, down from the 5.3x at the end of last quarter,” chief financial officer Sarah Wynne said on the company’s fourth quarter and year ended Sept. 30 earnings conference call on Thursday.

“Pro forma for the $35 per share dividend announced [Thursday] morning, our net debt-to-EBITDA ratio is 5.4x,” she said.

“We would like to be in the 5x to 7x [range for net leverage],” president and chief executive officer Kevin Stein said on the call.

“We’re comfortable in that range and I think that’s where we would like to sit,” he said.

The company has no plans to pay down debt in the near-term.

“Paying down debt seems unlikely at this time, though we still do take this into consideration [when allocating capita],” Stein said.

The company is monitoring interest rates even though 80% of its debt is hedged against rising rates.

“We continue to watch the rising interest rate environment closely,” Wynne said.

“We remain 80% hedged on our total $20 billion gross debt balance through a combination of interest rate caps, swaps and collars through 2025.

“This provides us adequate cushion against any rising rates, at least in the immediate term,” she said.

Cash and cash equivalents were $3,472,000,000 as of Sept. 30, 2023, compared to $3,001,000,000 as of Sept. 30, 2022.

Long-term debt was $19.33 billion as of Sept. 30, 2023, compared to $19,369,000,000 as of Sept. 30, 2022.

During the quarter, TransDigm sold $1.45 billion of 6 7/8% senior secured notes due Dec. 15, 2030, the proceeds of which were used, along with cash on hand, to redeem all of the company’s $950 million of 6 3/8% senior subordinated notes due 2026 and all of its $500 million of 6 7/8% senior subordinated notes due 2026.

TransDigm is a Cleveland-based producer of highly engineered aircraft components.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.