Wednesday, April 24, 2024
Wednesday, April 24, 2024
A June memo setting new requirements for TransDigm Group hasn't taken a significant toll on the company's Pentagon work, executives said today.
In a call with analysts, Kevin Stein, TransDigm's chief executive, said the company met with DOD directly about the memo, which said that contracting officers must require the submission of uncertified cost or pricing data by TransDigm and its subsidiaries, unless the prices were based on "adequate" competition or set by law or regulation.
"We're seeing some additional, we would say, pickiness on pricing or cost or different requests for information, but as a whole, we continue to work closely with the DOD and the [Defense Logistics Agency] on their purchases," he said. "There's been a little bit of slowdown on some orders, but, as a whole, we don't see any noticeable impact on the business."
"These tend to be small orders, generally speaking, and we are busy cooperating with the DLA on the fair and reasonable acquisition process that is dictated by rules and laws," Stein added. "We work within those completely."
TransDigm came under fire earlier this year after a Defense Department inspector general investigation found the company in some cases earned profits of more than 4,000% on sole-source contracts for military aircraft parts.
In July, the IG announced it would start an audit to determine whether the company's business model "affects the DOD's ability to pay fair and reasonable prices for spare parts."
During the call today, Stein said he doesn't know when the audit will be complete.
"We continue to work closely with the IG," he said. "It appears to be a similar scope as prior audits."
Meanwhile, TransDigm said today sales in its most recent quarter reached $1.5 billion, up about 47% from the same three-month period a year earlier.
The company noted that sales from acquisitions, including its purchase of Esterline, added $407 million.
TransDigm's quarterly profit hit $347 million, up 52% from the prior year.