Attached please find the results of our recent diligence conversations, as well as any of Antrim's reactions to earnings which did not merit a standalone report.
Please follow the link to download our thoughts in reaction to the company's Q2 report and management commentary.
In this issue of Short Shrift, please find our thoughts and diligence notes on a pipeline name that we've decided to pass on: Middleby Corporation (Nasdaq:MIDD), as well a brief earnings preview and warning ahead of Snap-On, Inc.'s (NYSE:SNA) earnings report scheduled for Thursday morning. In addition, we have some brief thoughts to share on recent divestitures at TransDigm Group, Inc. (NYSE:TDG).
In this month's issue of Short Shrift, please find our thoughts on recent strength in SNA shares as well as results of our ongoing due diligence, TRN's recent earnings announcement, PSA's earnings announcement, BLDP earnings (as well as the news competitor PLUG Power would be restating financials), and TDG's recently announced divestitures.
Please use the following link to find our review of TDG's fiscal Q1'21, which includes our thoughts on earnings quality, commercial aerospace aftermarket M&A, and the recent change in management's incentive compensation targets.
We've learned some lessons as we've rolled out coverage at Antrim. Some of our constructive feedback has been easy to implement. Like, why on earth don't Antrim Initiations include an "Issuer Info" section on the very first page? Well now they do. With this post, I'm re-publishing Antrim's previous initiations on Shorts: KNSL, QSR, and TDG with a little formatting change, and the new issuer info section, to make them slightly more accessible. There has been no change to substance or content of the reports.
TransDigm Group, Inc. is a manufacturer of engineered parts and components for aircraft original equipment manufacturers (“OEM’s”), as well as for maintenance and replacement in the aerospace aftermarket parts and services business. The company has generated compound EBITDA growth of over 22% annually for the past decade, and now trades at over 18x trailing, “peak” EBITDA, despite severe distress resulting from the coronavirus pandemic and the impact it has had on the air travel industry, as well as the extreme levels of financial leverage and overall indebtedness besetting the company as a result of their pursuit of an aggressive, M&A driven growth strategy. Antrim believes investors have become complacent as it regards the risks to TDG’s business model, and that the company’s M&A strategy and pricing practices are unsustainable.