TransDigm Group INC

Previous wording

Our business is well diversified due to the broad range of products that we offer to our customers. Our major product offerings, substantially all of which are ultimately provided to end-users in the aerospace industry, include mechanical/electromechanical actuators and controls, ignition systems and engine technology, specialized pumps and valves, power conditioning devices, specialized AC/DC electric motors and generators, batteries and chargers, engineered latching and locking devices, engineered rods, engineered connectors and elastomer sealing solutions, databus and power controls, cockpit security components and systems, specialized and advanced cockpit displays, engineered audio, radio and antenna systems, specialized lavatory components, seat belts and safety restraints, engineered and customized interior surfaces and related components, advanced sensor products, switches and relay panels, thermal protection and insulation, lighting and control technology, parachutes, high performance hoists, winches and lifting devices, cargo loading, handling and delivery systems and specialized flight, wind tunnel and jet engine testing services and equipment. Each of our product offerings is composed of many individual products that are typically customized to meet the needs of a particular aircraft platform or customer.

Current wording

Our business is well diversified due to the broad range of products that we offer to our customers. Our major product offerings, substantially all of which are ultimately provided to end-users in the aerospace industry, include mechanical/electromechanical actuators and controls, ignition systems and engine technology, specialized pumps and valves, power conditioning devices, specialized AC/DC electric motors and generators, batteries and chargers, engineered latching and locking devices, engineered rods, engineered connectors and elastomer sealing solutions, databus and power controls, cockpit security components and systems, specialized and advanced cockpit displays, engineered audio, radio and antenna systems, specialized lavatory components, seat belts and safety restraints, engineered and customized interior surfaces and related components, advanced sensor products, switches and relay panels, thermal protection and insulation, lighting and control technology, parachutes, high performance hoists, winches and lifting devices, cargo loading, handling and delivery systems, specialized flight, wind tunnel and jet engine testing services and equipment and electronic components used in the generation, amplification, transmission and reception of microwave signals. Each of our product offerings is composed of many individual products that are typically customized to meet the needs of a particular aircraft platform or customer.

Previous wording

For the second quarter of fiscal year 2024, we generated net sales of $1,919 million and net income attributable to TD Group of $403 million. EBITDA As Defined was $1,021 million, or 53.2% of net sales. Refer to the “Non-GAAP Financial Measures” section for certain information regarding EBITDA and EBITDA As Defined, including reconciliations of EBITDA and EBITDA As Defined to income from operations and net cash provided by operating activities.

Current wording

For the third quarter of fiscal year 2024, we generated net sales of $2,046 million and net income attributable to TD Group of $461 million. EBITDA As Defined was $1,091 million, or 53.3% of net sales. Refer to the “Non-GAAP Financial Measures” section for certain information regarding EBITDA and EBITDA As Defined, including reconciliations of EBITDA and EBITDA As Defined to income from operations and net cash provided by operating activities.

Previous wording

In the first half of fiscal 2024, the rebound in our commercial aerospace end markets from the COVID-19 pandemic continued, and we remain encouraged by the progression of the commercial aerospace market recovery to date, building off of the progress from fiscal 2023. Commercial air travel in domestic markets continues to lead the air traffic recovery with most domestic markets nearing, achieving or surpassing pre-pandemic air traffic levels. The pace of the international recovery has been slower than the domestic recovery. However, international revenue passenger kilometers (“RPKs”), a metric used to measure air traffic demand, continue to make positive strides. According to the International Air Transport Association (“IATA”), February 2024 marked the first occurrence in which both domestic and international RPKs surpassed 2019 (i.e., pre-pandemic) levels. We expect the Company's commercial aerospace end markets to continue progressing the remainder of fiscal 2024 barring any significant disruptions or setbacks. In the first half of fiscal 2024, we experienced improved sales in the commercial original equipment manufacturer (“OEM”) sector primarily due to increased aircraft production by Boeing and Airbus. Aircraft production rates still remain below pre-pandemic levels, mainly due to continued commercial OEM supply chain and production issues that are slowing the pace of new aircraft manufacturing. Airline demand for new aircraft is strong and both Boeing and Airbus have disclosed further planned OEM production rate increases for calendar 2024; however, we are continuing to monitor the Federal Aviation Administration's recent halting of Boeing's planned MAX production increase due to Boeing's ongoing quality control issues.

Current wording

In the first three quarters of fiscal 2024, the rebound in our commercial aerospace end markets from the COVID-19 pandemic continued, and we remain encouraged by the progression of the commercial aerospace market recovery to date, building off the progress from fiscal 2023. Commercial air travel in domestic markets continues to lead the air traffic recovery with most domestic markets nearing, achieving or surpassing pre-pandemic air traffic levels. The pace of the international recovery has been slower than the domestic recovery; however, it has continued to make steady improvement. Since February 2024, both domestic and international revenue passenger kilometers (“RPKs”) have surpassed 2019 (i.e., pre-pandemic) levels. We expect the Company's commercial aerospace end markets to continue progressing the remainder of fiscal 2024 barring any significant disruptions or setbacks. In the first three quarters of fiscal 2024, we experienced improved sales in the commercial original equipment manufacturer (“OEM”) sector primarily due to increased aircraft production by Boeing and Airbus. Aircraft production rates still remain below pre-pandemic levels, mainly due to persisting, though improving, supply chain and production issues that are slowing the pace of new aircraft manufacturing. Airline demand for new aircraft is strong and both Boeing and Airbus have disclosed further planned OEM production rate increases for calendar 2024; however, we are continuing to monitor the Federal Aviation Administration's recent halting of Boeing's planned MAX production increase due to Boeing's ongoing quality control issues.

Previous wording

The pace of U.S. government defense spending outlays and government funding reprioritization provides for uncertainty in the defense aerospace market. Beginning in the second half of fiscal 2023 and continuing into the first half of fiscal 2024, defense sales have increased compared to the comparable prior year period due to improving U.S. government defense spend outlays. Department of Defense (“DOD”) budgets have also trended upwards; however, the ongoing conflicts between Russia and Ukraine and Israel and Hamas and potential impact on reprioritization of U.S. government defense spending and other ancillary impacts of these conflicts causes uncertainty.

Current wording

In the first three quarters of fiscal 2024, defense sales have increased compared to the comparable prior year period due to improving U.S. government defense spend outlays. Department of Defense (“DOD”) budgets have also trended upwards as geopolitical challenges such as the ongoing conflicts between Russia and Ukraine and Israel and Hamas, and military modernization efforts are driving demand. Historically, the inconsistent pace of U.S. government defense spending outlays and government funding reprioritization provides for uncertainty in the defense aerospace market.

Previous wording

(1)Net income applicable to TD Group common stockholders represents net income attributable to TD Group less special dividends declared or paid on participating securities, including dividend equivalent payments of $101 million and $38 million for the twenty-six week periods ended March 30, 2024 and April 1, 2023, respectively.

Current wording

(1)Net income applicable to TD Group common stockholders represents net income attributable to TD Group less special dividends declared or paid on participating securities, including dividend equivalent payments of $101 million and $38 million for the thirty-nine week periods ended June 29, 2024 and July 1, 2023, respectively.

Previous wording

Organic sales represent net sales from existing businesses owned by the Company, excluding sales from acquisitions. Acquisition sales represent net sales from acquired businesses for the period up to one year subsequent to their respective acquisition date. We believe this measure provides investors with a supplemental understanding of underlying sales trends by providing sales growth on a consistent basis. Refer to Note 2, “Acquisitions,” in the notes to the condensed consolidated financial statements included herein for further information on the Company's recent acquisitions activity.

Current wording

Organic sales represent net sales from existing businesses owned by the Company, excluding sales from acquisitions. Acquisition sales represent net sales from acquired businesses for the period up to one year from the respective acquisition date. We believe this measure provides investors with a supplemental understanding of underlying sales trends by providing sales growth on a consistent basis. Refer to Note 2, “Acquisitions,” in the notes to the condensed consolidated financial statements included herein for further information on the Company's recent acquisitions activity.

Previous wording

The increase in organic sales of $257 million for the thirteen week period ended March 30, 2024 compared to the thirteen week period ended April 1, 2023 is primarily related to increases in defense sales ($127 million, an increase of 20.8%), commercial OEM sales ($79 million, an increase of 22.0%) and commercial aftermarket sales ($41 million, an increase of 7.9%). The increase in defense sales is primarily attributable to improving U.S. government defense spend outlays. The increase in commercial OEM sales is primarily attributable to the continued recovery in both narrow-body and wide-body aircraft production and deliveries. The increase in commercial aftermarket sales is primarily attributable to the continued recovery in commercial air travel demand and the resulting higher flight hours and utilization of aircraft in the second quarter of fiscal 2024 compared to fiscal 2023, particularly internationally.

Current wording

The increase in organic sales of $254 million for the thirteen week period ended June 29, 2024 compared to the thirteen week period ended July 1, 2023 is primarily related to increases in defense sales ($91 million, an increase of 13.3%), commercial OEM sales ($88 million, an increase of 23.2%) and commercial aftermarket sales ($61 million, an increase of 11.1%). The increase in defense sales is primarily attributable to improving U.S. government defense spend outlays. The increase in commercial OEM sales is primarily attributable to the continued recovery in both narrow-body and wide-body aircraft production and deliveries. The increase in commercial aftermarket sales is primarily attributable to the continued recovery in commercial air travel demand and the resulting higher flight hours and utilization of aircraft in the third quarter of fiscal 2024 compared to fiscal 2023, particularly internationally.

Previous wording

•Cost of Sales and Gross Profit. Cost of sales increased by $104 million, or 15.7%, to $767 million for the thirteen week period ended March 30, 2024 compared to $663 million for the thirteen week period ended April 1, 2023. Cost of sales and the related percentage of net sales for the thirteen week periods ended March 30, 2024 and April 1, 2023 were as follows (amounts in millions):

Current wording

•Cost of Sales and Gross Profit. Cost of sales increased by $111 million, or 15.5%, to $826 million for the thirteen week period ended June 29, 2024 compared to $715 million for the thirteen week period ended July 1, 2023. Cost of sales and the related percentage of net sales for the thirteen week periods ended June 29, 2024 and July 1, 2023 were as follows (amounts in millions):

Previous wording

Cost of sales during the thirteen week period ended March 30, 2024 decreased as a percentage of net sales despite continued inflationary pressures. This was primarily driven by the application of our three core value-driven operating strategy (obtaining profitable new business, continually improving our cost structure and providing highly engineered value-added products to customers) coupled with fixed overhead costs incurred being spread over a higher production volume, which contributed to the gross profit as a percentage of net sales increasing by 1.6 percentage points to 60.0% for the thirteen week period ended March 30, 2024 from 58.4% for the thirteen week period ended April 1, 2023.

Current wording

Cost of sales during the thirteen week period ended June 29, 2024 decreased as a percentage of net sales. This was primarily driven by the application of our three core value-driven operating strategy (obtaining profitable new business, continually improving our cost structure and providing highly engineered value-added products to customers) coupled with fixed overhead costs incurred being spread over a higher production volume, which contributed to the gross profit as a percentage of net sales increasing by 0.6 percentage points to 59.6% for the thirteen week period ended June 29, 2024 from 59.0% for the thirteen week period ended July 1, 2023.

Previous wording

•Selling and Administrative Expenses. Selling and administrative expenses increased by $49 million to $248 million, or 12.9% of net sales, for the thirteen week period ended March 30, 2024 from $199 million, or 12.5% of net sales, for the thirteen week period ended April 1, 2023. Selling and administrative expenses and the related percentage of net sales for the thirteen week periods ended March 30, 2024 and April 1, 2023 were as follows (amounts in millions):

Current wording

•Selling and Administrative Expenses. Selling and administrative expenses increased by $39 million to $248 million, or 12.1% of net sales, for the thirteen week period ended June 29, 2024 from $209 million, or 12.0% of net sales, for the thirteen week period ended July 1, 2023. Selling and administrative expenses and the related percentage of net sales for the thirteen week periods ended June 29, 2024 and July 1, 2023 were as follows (amounts in millions):

Previous wording

•Amortization of Intangible Assets. Amortization of intangible assets was $37 million for the thirteen week period ended March 30, 2024 compared to $35 million for the thirteen week period ended April 1, 2023. The increase in amortization expense of $2 million was primarily due to the amortization expense recognized on intangible assets from the third quarter of fiscal 2023 acquisition of Calspan.

Current wording

•Amortization of Intangible Assets. Amortization of intangible assets was $38 million for the thirteen week period ended June 29, 2024 compared to $37 million for the thirteen week period ended July 1, 2023. The increase in amortization expense of $1 million was primarily due to the amortization expense recognized on intangible assets from the fiscal 2024 acquisitions. The intangible assets recognized in connection with the fiscal 2024 acquisitions are summarized in Note 6, “Intangible Assets,” to the condensed consolidated financial statements included herein.

Previous wording

•Interest Expense-net. Interest expense-net includes interest on borrowings outstanding, amortization of debt issuance costs, original issue discount and premium, revolving credit facility fees, finance leases, interest income and the impact of interest rate swaps and caps designated and qualifying as cash flow hedges. Interest expense-net increased $45 million, or 7.7%, to $626 million for the twenty-six week period ended March 30, 2024 from $581 million for the comparable twenty-six week period in the prior fiscal year. The increase in interest expense-net was primarily due an increase in the base rates, i.e., Term SOFR and LIBOR, to the portion of our variable rate debt that is not hedged via an interest rate swap or cap. This was partially offset by a $35 million increase in interest income. The weighted average interest rate for cash interest payments on total borrowings outstanding for the twenty-six week period ended March 30, 2024 was 6.3% compared to 6.2% for the twenty-six week period ended April 1, 2023.

Current wording

•Interest Expense-net. Interest expense-net includes interest on borrowings outstanding, amortization of debt issuance costs, original issue discount and premium, revolving credit facility fees, finance leases, interest income and the impact of interest rate swaps and caps designated and qualifying as cash flow hedges. Interest expense-net increased $25 million, or 8.6%, to $316 million for the thirteen week period ended June 29, 2024 from $291 million for the comparable thirteen week period in the prior fiscal year. The increase in interest expense-net was primarily due to an increase in outstanding borrowings (refer to Note 7, “Debt”in the notes to the condensed consolidated financial statements included herein for additional details). This was partially offset by a $20 million increase in interest income. The weighted average interest rate for cash interest payments on total borrowings outstanding was 6.2% for the thirteen week period ended June 29, 2024 compared to 6.1% for the thirteen week period ended July 1, 2023.

Previous wording

•Refinancing Costs. Refinancing costs of $28 million incurred for the thirteen week period ended March 30, 2024 were primarily related to the write-off of unamortized debt issuance costs recorded in conjunction with the redemption of the 2026 Secured Notes, which was completed during the thirteen week period ended March 30, 2024 (refer to Note 7, “Debt,”in the notes to the condensed consolidated financial statements included herein for additional details). Refinancing costs of $5 million incurred for the thirteen week period ended April 1, 2023 were primarily related to third party fees incurred for the refinancing activity under Amendment No. 11, Loan Modification Agreement and Refinancing Facility Agreement (herein, “Amendment No. 11”), to the Second Amended and Restated Credit Agreement, dated June 4, 2014 (the “Credit Agreement”) completed during the second quarter of fiscal 2023.

Current wording

•Refinancing Costs. Refinancing costs of $30 million incurred for the thirteen week period ended June 29, 2024 were primarily related to the write-off of unamortized debt issuance costs recorded in conjunction with the redemption of the 7.50% senior subordinated notes due 2027 (the “7.50% 2027 Notes”) and the write-off of unamortized original issue discount and debt issuance costs in conjunction with Amendment No. 16 Loan Modification Agreement and Refinancing Facility Agreement (herein, “Amendment No. 16”) to the Second Amended and Restated Credit Agreement, dated June 4, 2014 (the “Credit Agreement”). Refer to Note 7, “Debt,”in the notes to the condensed consolidated financial statements included herein for additional details. Refinancing costs of $32 million incurred for the thirteen week period ended July 1, 2023 were primarily related to the redemption of the 8.00% secured notes due 2025 (the “2025 Secured Notes”).

Previous wording

•Other Income. Other income was $8 million for the twenty-six week period ended March 30, 2024 compared to $3 million recorded for the twenty-six week period ended April 1, 2023. Other income for the twenty-six week period ended March 30, 2024 primarily related to proceeds received from a patent infringement settlement and the non-service related components of benefit costs on the Company's benefit plans. Other income for the twenty-six week period ended April 1, 2023 primarily related to the non-service related components of benefit costs on the Company's benefit plans.

Current wording

•Other Income. Other income was $14 million for the thirteen week period ended June 29, 2024 compared to $9 million for the thirteen week period ended July 1, 2023. Other income for the thirteen week period ended June 29, 2024 primarily related to a gain on sale of business. Other income for the thirteen week period ended July 1, 2023 primarily related to a $9 million cash refund received for the Esterline Retirement Plan (the “ERP”) upon the finalizing of the group annuity purchase funding.

Previous wording

•Income Tax Provision. Income tax expense as a percentage of income before income taxes was approximately 22.2% for the thirteen week period ended March 30, 2024 compared to 23.4% for the thirteen week period ended April 1, 2023. The Company’s lower effective tax rate for the thirteen week period ended March 30, 2024 was primarily due to a less significant impact on the rate from the valuation allowance applicable to the Company's net interest deduction limitation carryforward.

Current wording

•Income Tax Provision. Income tax expense as a percentage of income before income taxes was approximately 23.4% for the thirteen week period ended June 29, 2024 compared to 24.9% for the thirteen week period ended July 1, 2023. The Company’s lower effective tax rate for the thirteen week period ended June 29, 2024 was primarily due to a less significant impact on the rate from the valuation allowance applicable to the Company's net interest deduction limitation carryforward.

Previous wording

•Net Income Attributable to TD Group. Net income attributable to TD Group increased $99 million, or 32.6%, to $403 million for the thirteen week period ended March 30, 2024 compared to net income attributable to TD Group of $304 million for the thirteen week period ended April 1, 2023, primarily as a result of the factors referenced above.

Current wording

•Net Income Attributable to TD Group. Net income attributable to TD Group increased $110 million, or 31.3%, to $461 million for the thirteen week period ended June 29, 2024 compared to net income attributable to TD Group of $351 million for the thirteen week period ended July 1, 2023, primarily as a result of the factors referenced above.

Previous wording

•Earnings per Share. Basic and diluted earnings per share was $6.97 for the thirteen week period ended March 30, 2024 and $5.32 for the thirteen week period ended April 1, 2023.

Current wording

•Earnings per Share. Basic and diluted earnings per share was $7.96 for the thirteen week period ended June 29, 2024 and $6.14 for the thirteen week period ended July 1, 2023.

Previous wording

EBITDA As Defined for the Power & Control segment increased approximately $175 million, an increase of 20.5%, resulting from higher organic sales in the commercial aftermarket, commercial OEM and defense channels. Also contributing to the increase in EBITDA As Defined was the application of our three core value-driven operating strategy and positive leverage on our fixed overhead costs spread over a higher production volume despite the ongoing inflationary environment for freight, labor and certain raw materials.

Current wording

EBITDA As Defined for the Power & Control segment increased approximately $100 million, an increase of 20.5%, resulting from higher organic sales in the defense, commercial OEM and commercial aftermarket channels. Also contributing to the increase in EBITDA As Defined was the application of our three core value-driven operating strategy and positive leverage on our fixed overhead costs spread over a higher production volume despite the ongoing inflationary environment for freight, labor and certain raw materials.

Previous wording

EBITDA As Defined for the Airframe segment increased approximately $137 million, an increase of 36.7%. The increase in EBITDA as Defined for the Airframe segment is attributable to the same factors described in the paragraph above for the Power & Control segment. EBITDA As Defined for the Airframe segment from acquisitions was approximately $25 million primarily due to the impact of the Calspan acquisition. EBITDA As Defined from acquisitions represents EBITDA As Defined from acquired businesses for the period up to one year subsequent to the respective acquisition date.

Current wording

EBITDA As Defined from acquisitions for the Power & Control and Airframe segments contributed approximately $17 million in aggregate to the increase in EBITDA As Defined. EBITDA As Defined from acquisitions represents EBITDA As Defined from acquired businesses for the period up to one year from the respective acquisition date.

Previous wording

Twenty-six week period ended March 30, 2024 compared with the twenty-six week period ended April 1, 2023

Current wording

Thirty-nine week period ended June 29, 2024 compared with the thirty-nine week period ended July 1, 2023

Previous wording

•Net Sales. Net organic sales and acquisition sales and the related dollar and percentage changes for the twenty-six week periods ended March 30, 2024 and April 1, 2023 were as follows (amounts in millions):

Current wording

•Net Sales. Net organic sales and acquisition sales and the related dollar and percentage changes for the thirty-nine week periods ended June 29, 2024 and July 1, 2023 were as follows (amounts in millions):

Previous wording

Organic sales represent net sales from existing businesses owned by the Company, excluding sales from acquisitions. Acquisition sales represent net sales from acquired businesses for the period up to one year subsequent to their respective acquisition date. We believe this measure provides investors with a supplemental understanding of underlying sales trends by providing sales growth on a consistent basis. Refer to Note 2, “Acquisitions,” in the notes to the condensed consolidated financial statements included herein for further information on the Company's recent acquisitions activity.

Current wording

Organic sales represent net sales from existing businesses owned by the Company, excluding sales from acquisitions. Acquisition sales represent net sales from acquired businesses for the period up to one year from the respective acquisition date. We believe this measure provides investors with a supplemental understanding of underlying sales trends by providing sales growth on a consistent basis. Refer to Note 2, “Acquisitions,” in the notes to the condensed consolidated financial statements included herein for further information on the Company's recent acquisitions activity.

Previous wording

The increase in organic sales of $586 million for the twenty-six week period ended March 30, 2024 compared to the twenty-six week period ended April 1, 2023 is primarily related to increases in defense sales ($276 million, an increase of 24.1%), commercial OEM sales ($156 million, an increase of 23.3%) and commercial aftermarket sales ($142 million, an increase of 14.2%). The increase in defense sales is primarily attributable to improving U.S. government defense spend outlays. The increase in commercial OEM sales is primarily attributable to the continued recovery in both narrow-body and wide-body aircraft production and deliveries. The increase in commercial aftermarket sales is primarily attributable to the continued recovery in commercial air travel demand and the resulting higher flight hours and utilization of aircraft in the first half of fiscal 2024 compared to fiscal 2023, particularly internationally.

Current wording

The increase in organic sales of $840 million for the thirty-nine week period ended June 29, 2024 compared to the thirty-nine week period ended July 1, 2023 is primarily related to increases in defense sales ($367 million, an increase of 20.1%), commercial OEM sales ($243 million, an increase of 23.2%) and commercial aftermarket sales ($204 million, an increase of 13.1%). The increase in defense sales is primarily attributable to improving U.S. government defense spend outlays. The increase in commercial OEM sales is primarily attributable to the continued recovery in both narrow-body and wide-body aircraft production and deliveries. The increase in commercial aftermarket sales is primarily attributable to the continued recovery in commercial air travel demand and the resulting higher flight hours and utilization of aircraft in the first nine months of fiscal 2024 compared to fiscal 2023, particularly internationally.

Previous wording

•Cost of Sales and Gross Profit. Cost of sales increased by $247 million, or 19.5%, to $1,515 million for the twenty-six week period ended March 30, 2024 compared to $1,268 million for the twenty-six week period ended April 1, 2023. Cost of sales and the related percentage of net sales for the twenty-six week periods ended March 30, 2024 and April 1, 2023 were as follows (amounts in millions):

Current wording

•Cost of Sales and Gross Profit. Cost of sales increased by $358 million, or 18.1%, to $2,341 million for the thirty-nine week period ended June 29, 2024 compared to $1,983 million for the thirty-nine week period ended July 1, 2023. Cost of sales and the related percentage of net sales for the thirty-nine week periods ended June 29, 2024 and July 1, 2023 were as follows (amounts in millions):

Previous wording

Cost of sales during the twenty-six week period ended March 30, 2024 decreased as a percentage of net sales despite increased inflationary pressures. This was primarily driven by the application of our three core value-driven operating strategy (obtaining profitable new business, continually improving our cost structure and providing highly engineered value-added products to customers) coupled with fixed overhead costs incurred being spread over a higher production volume, which contributed to the gross profit as a percentage of net sales increasing by 1.5 percentage points to 59.1% for the twenty-six week period ended March 30, 2024 from 57.6% for the twenty-six week period ended April 1, 2023.

Current wording

Cost of sales during the thirty-nine week period ended June 29, 2024 decreased as a percentage of net sales despite increased inflationary pressures. This was primarily driven by the application of our three core value-driven operating strategy (obtaining profitable new business, continually improving our cost structure and providing highly engineered value-added products to customers) coupled with fixed overhead costs incurred being spread over a higher production volume, which contributed to the gross profit as a percentage of net sales increasing by 1.2 percentage points to 59.3% for the thirty-nine week period ended June 29, 2024 from 58.1% for the thirty-nine week period ended July 1, 2023.

Previous wording

Foreign exchange rates, particularly the U.S. dollar compared to the British pound and the euro, weakened at a more significant rate in the first half of fiscal 2023 compared to fiscal 2024, resulting in a decrease in foreign currency losses in fiscal 2024.

Current wording

Foreign exchange rates, particularly the U.S. dollar compared to the British pound and the euro, weakened at a more significant rate in the first three quarters of fiscal 2023 compared to fiscal 2024, resulting in a decrease in foreign currency losses in fiscal 2024.

Previous wording

•Selling and Administrative Expenses. Selling and administrative expenses increased by $98 million to $467 million, or 12.6% of net sales, for the twenty-six week period ended March 30, 2024 from $369 million, or 12.3% of net sales, for the twenty-six week period ended April 1, 2023. Selling and administrative expenses and the related percentage of net sales for the twenty-six week periods ended March 30, 2024 and April 1, 2023 were as follows (amounts in millions):

Current wording

•Selling and Administrative Expenses. Selling and administrative expenses increased by $137 million to $715 million, or 12.4% of net sales, for the thirty-nine week period ended June 29, 2024 from $578 million, or 12.2% of net sales, for the thirty-nine week period ended July 1, 2023. Selling and administrative expenses and the related percentage of net sales for the thirty-nine week periods ended June 29, 2024 and July 1, 2023 were as follows (amounts in millions):

Previous wording

Excluding non-cash stock and deferred compensation expense and acquisition and divestiture transaction-related expenses, selling and administrative expenses as a percentage of net sales for the thirteen week period ended March 30, 2024 decreased as a percentage of net sales compared to the thirteen week period ended April 1, 2023 despite the higher inflationary environment compared to a year ago due to continued strategic cost mitigation efforts. The increase in non-cash stock and deferred compensation expense is primarily attributable to the increase in the Black-Scholes fair value of the stock option grants impacting non-cash stock compensation expense. The increase in the Black-Scholes fair value is due to the appreciation of the stock price, which is a key assumption used to determine the Black-Scholes fair value. Refer to Note 2, “Acquisitions,” in the notes to the condensed consolidated financial statements included herein for the activity impacting the increase in acquisition and divestiture transaction-related expenses.

Current wording

Excluding certain costs specified above, selling and administrative expenses as a percentage of net sales for the thirty-nine week period ended June 29, 2024 decreased compared to the thirty-nine week period ended July 1, 2023 despite the higher inflationary environment compared to a year ago due to continued strategic cost mitigation efforts. The increase in non-cash stock and deferred compensation expense is primarily attributable to the increase in the Black-Scholes fair value of the stock option grants impacting non-cash stock compensation expense. The increase in the Black-Scholes fair value is due to the appreciation of the stock price, which is a key assumption used to determine the Black-Scholes fair value. Acquisition-related expenses increased due to an increase in acquisition activity compared to prior year. Bad debt expense for the thirty-nine week period ended July 1, 2023 was favorably impacted by a reduction in the allowance for uncollectible accounts due to improving market conditions within commercial aerospace and the resulting reduction in assessed risk associated with the collectibility of certain trade accounts receivable.

Previous wording

•Amortization of Intangible Assets. Amortization of intangible assets was $72 million for the twenty-six week period ended March 30, 2024 compared to $68 million for the twenty-six week period ended April 1, 2023. The increase in amortization expense of $4 million was primarily due to the amortization expense recognized on intangible assets from the third quarter of fiscal 2023 acquisition of Calspan.

Current wording

•Amortization of Intangible Assets. Amortization of intangible assets was $110 million for the thirty-nine week period ended June 29, 2024 compared to $105 million for the thirty-nine week period ended July 1, 2023. The increase in amortization expense of $5 million was primarily due to the amortization expense recognized on intangible assets from the third quarter fiscal 2023 acquisition of Calspan and the fiscal 2024 acquisitions. The intangible assets recognized in connection with the fiscal 2024 acquisitions are summarized in Note 6, “Intangible Assets,” to the condensed consolidated financial statements included herein.

Previous wording

•Interest Expense-net. Interest expense-net includes interest on borrowings outstanding, amortization of debt issuance costs, original issue discount and premium, revolving credit facility fees, finance leases, interest income and the impact of interest rate swaps and caps designated and qualifying as cash flow hedges. Interest expense-net increased $31 million, or 10.5%, to $326 million for the thirteen week period ended March 30, 2024 from $295 million for the comparable thirteen week period in the prior fiscal year. The increase in interest expense-net was primarily due an increase in the base rates, i.e., Term Secured Overnight Financing Rate (“Term SOFR”) and London Inter-Bank Offered Rate (“LIBOR”), to the portion of our variable rate debt that is not hedged (refer to Note 10, “Derivatives and Hedging Activities” for information on our hedges). This was partially offset by a $20 million increase in interest income. The weighted average interest rate for cash interest payments on total borrowings outstanding for the thirteen week period ended March 30, 2024 was 6.3% compared to 6.2% for the thirteen week period ended April 1, 2023.

Current wording

•Interest Expense-net. Interest expense-net includes interest on borrowings outstanding, amortization of debt issuance costs, original issue discount and premium, revolving credit facility fees, finance leases, interest income and the impact of interest rate swaps and caps designated and qualifying as cash flow hedges. Interest expense-net increased $71 million, or 8.1%, to $943 million for the thirty-nine week period ended June 29, 2024 from $872 million for the comparable thirty-nine week period in the prior fiscal year. The increase in interest expense-net was primarily due to an increase in the base rate, Term Secured Overnight Financing Rate (“Term SOFR”), to the portion of our variable rate debt that is not hedged (refer to Note 10, “Derivatives and Hedging Activities” for information on our hedges), as well as an increase in outstanding borrowings (refer to Note 7, “Debt”in the notes to the condensed consolidated financial statements included herein for additional details). This was partially offset by a $54 million increase in interest income. The weighted average interest rate for cash interest payments on total borrowings outstanding for the thirty-nine week periods ended June 29, 2024 and July 1, 2023 was 6.1%.

Previous wording

•Refinancing Costs. Refinancing costs of $28 million incurred for the twenty-six week period ended March 30, 2024 were primarily related to the write-off of unamortized debt issuance costs recorded in conjunction with the redemption of the 2026 Secured Notes, which was completed during the twenty-six week period ended March 30, 2024 (refer to Note 7, “Debt,” in the notes to the condensed consolidated financial statements included herein for additional details). Refinancing costs of $9 million incurred for the twenty-six week period ended April 1, 2023 were primarily related to third party fees incurred for the refinancing activity under Amendment No. 10, Loan Modification Agreement and Refinancing Facility Agreement (herein, “Amendment No. 10”) and Amendment No. 11 to the Credit Agreement, which were completed during the first half of fiscal 2023.

Current wording

•Refinancing Costs. Refinancing costs of $59 million incurred for the thirty-nine week period ended June 29, 2024 were primarily related to the third party fees and write-off of unamortized debt issuance costs and original issue discount recorded in conjunction with the amendments to the Credit Agreement and the third party fees and write-off of unamortized debt issuance costs recorded in conjunction with the notes redemptions completed during the thirty-nine week period ended June 29, 2024. Refer to Note 7, “Debt,” in the notes to the condensed consolidated financial statements included herein for additional details. Refinancing costs of $41 million incurred for the thirty-nine week period ended July 1, 2023 were primarily related to the redemption of the 2025 Secured Notes and third party fees incurred for the refinancing activity under the amendments to the Credit Agreement completed during the thirty-nine week period ended July 1, 2023.

Previous wording

•Other Income. Other income was $6 million for the thirteen week period ended March 30, 2024 compared to $2 million for the thirteen week period ended April 1, 2023. Other income for the thirteen week period ended March 30, 2024 primarily related to proceeds received from a patent infringement settlement and the non-service related components of benefit costs on the Company's benefit plans. Other income for the thirteen week period ended April 1, 2023 primarily related to the non-service related components of benefit costs on the Company's benefit plans.

Current wording

•Other Income. Other income was $24 million for the thirty-nine week period ended June 29, 2024 compared to $12 million recorded for the thirty-nine week period ended July 1, 2023. Other income for the thirty-nine week period ended June 29, 2024 primarily related to a gain on sale of business, royalty and other income and the non-service related components of benefit costs on the Company's benefit plans. Other income for the thirty-nine week period ended July 1, 2023 primarily related to a $9 million cash refund received for the ERP upon the finalizing of the group annuity purchase funding.

Previous wording

•Income Tax Provision. Income tax expense as a percentage of income before income taxes was approximately 22.0% for the twenty-six week period ended March 30, 2024 compared to 23.5% for the twenty-six week period ended April 1, 2023. The Company’s lower effective tax rate for the twenty-six week period ended March 30, 2024 was primarily due to a less significant impact on the rate from the valuation allowance applicable to the Company's net interest deduction limitation carryforward.

Current wording

•Income Tax Provision. Income tax expense as a percentage of income before income taxes was approximately 22.5% for the thirty-nine week period ended June 29, 2024 compared to 24.1% for the thirty-nine week period ended July 1, 2023. The Company’s lower effective tax rate for the thirty-nine week period ended June 29, 2024 was primarily due to a less significant impact on the rate from the valuation allowance applicable to the Company's net interest deduction limitation carryforward.

Previous wording

•Net Income Attributable to TD Group. Net income attributable to TD Group increased $253 million, or 47.6%, to $785 million for the twenty-six week period ended March 30, 2024 compared to net income attributable to TD Group of $532 million for the twenty-six week period ended April 1, 2023, primarily as a result of the factors referenced above.

Current wording

•Net Income Attributable to TD Group. Net income attributable to TD Group increased $363 million, or 41.1%, to $1,246 million for the thirty-nine week period ended June 29, 2024 compared to net income attributable to TD Group of $883 million for the thirty-nine week period ended July 1, 2023, primarily as a result of the factors referenced above.

Previous wording

•Earnings per Share. Basic and diluted earnings per share from continuing operations was $11.83 for the twenty-six week period ended March 30, 2024 and $8.65 for the twenty-six week period ended April 1, 2023. Net income attributable to TD Group for the twenty-six week period ended March 30, 2024 of $785 million was decreased by dividend equivalent payments of $101 million, or $1.75 per share, resulting in net income applicable to TD Group common stockholders of $684 million. Net income attributable to TD Group for the twenty-six week period ended April 1, 2023 of $532 million was decreased by dividend equivalent payments of $38 million, or $0.67 per share, resulting in net income applicable to TD Group common stockholders of $494 million.

Current wording

•Earnings per Share. Basic and diluted earnings per share from continuing operations was $19.81 for the thirty-nine week period ended June 29, 2024 and $14.80 for the thirty-nine week period ended July 1, 2023. Net income attributable to TD Group for the thirty-nine week period ended June 29, 2024 of $1,246 million was decreased by dividend equivalent payments of $101 million, or $1.75 per share, resulting in net income applicable to TD Group common stockholders of $1,145 million. Net income attributable to TD Group for the thirty-nine week period ended July 1, 2023 of $883 million was decreased by dividend equivalent payments of $38 million, or $0.67 per share, resulting in net income applicable to TD Group common stockholders of $845 million.

Previous wording

•Segment Net Sales. Net sales by segment for the twenty-six week periods ended March 30, 2024 and April 1, 2023 were as follows (amounts in millions):

Current wording

•Segment Net Sales. Net sales by segment for the thirty-nine week periods ended June 29, 2024 and July 1, 2023 were as follows (amounts in millions):

Previous wording

Net sales for the Airframe segment increased $226 million, an increase of 30.8%, for the thirteen week period ended March 30, 2024 compared to the thirteen week period ended April 1, 2023. The sales increase resulted primarily from increases in organic sales in defense ($78 million, an increase of 33.3%), commercial OEM ($43 million, an increase of 20.8%) and commercial aftermarket ($27 million, an increase of 10.4%). The increase in defense sales, commercial OEM sales and commercial aftermarket sales for the Airframe segment is attributable to the same factors described in the paragraph above for the Power & Control segment. Acquisition sales were approximately $70 million for the thirteen week period ended March 30, 2024 primarily due to the impact of the Calspan acquisition. Acquisition sales represent net sales from acquired businesses for the period up to one year subsequent to their respective acquisition date.

Current wording

Net sales for the Airframe segment increased $591 million, an increase of 26.8%, for the thirty-nine week period ended June 29, 2024 compared to the thirty-nine week period ended July 1, 2023. The sales increase resulted primarily from increases in organic sales in defense ($173 million, an increase of 24.4%), commercial OEM ($139 million, an increase of 23.6%) and commercial aftermarket ($105 million, an increase of 13.4%). The increase in defense sales, commercial OEM sales and commercial aftermarket sales for the Airframe segment is attributable to the same factors described in the paragraph above for the Power & Control segment.

Previous wording

The change in Non-aviation net sales compared to the twenty-six week period in the prior fiscal year was not material.

Current wording

The change in Non-aviation net sales compared to the thirty-nine week period in the prior fiscal year was not material.

Previous wording

•EBITDA As Defined. Refer to “Non-GAAP Financial Measures” in this discussion and analysis for additional information and limitations regarding these non-GAAP financial measures, including a reconciliation to the comparable U.S. GAAP financial measure. EBITDA As Defined by segment for the twenty-six week periods ended March 30, 2024 and April 1, 2023 were as follows (amounts in millions):

Current wording

•EBITDA As Defined. Refer to “Non-GAAP Financial Measures” in this discussion and analysis for additional information and limitations regarding these non-GAAP financial measures, including a reconciliation to the comparable U.S. GAAP financial measure. EBITDA As Defined by segment for the thirty-nine week periods ended June 29, 2024 and July 1, 2023 were as follows (amounts in millions):

Previous wording

EBITDA As Defined for the Power & Control segment increased approximately $67 million, an increase of 14.8%, resulting from higher organic sales in the defense, commercial OEM and commercial aftermarket channels. Also contributing to the increase in EBITDA As Defined was the application of our three core value-driven operating strategy and positive leverage on our fixed overhead costs spread over a higher production volume despite the ongoing inflationary environment for freight, labor and certain raw materials.

Current wording

EBITDA As Defined for the Power & Control segment increased approximately $274 million, an increase of 20.4%, resulting from higher organic sales in the defense, commercial OEM and commercial aftermarket channels. Also contributing to the increase in EBITDA As Defined was the application of our three core value-driven operating strategy and positive leverage on our fixed overhead costs spread over a higher production volume despite the ongoing inflationary environment for freight, labor and certain raw materials.