TransDigm Group (TDG) risk factors, FY2025 10-K

Risks Related to our Strategy

1. 01Our business focuses almost exclusively on the aerospace and defense industry93% rewritten
2. 02We may rely heavily on certain customers for much of our sales30% rewritten
3. 03We generally do not have guaranteed future sales of our products. Further, when we enter into fixed price contracts with some of our customers, we take the risk for cost overruns31% rewritten
4. 04We intend to pursue acquisitions. Our business may be adversely affected if we cannot consummate acquisitions on satisfactory terms, or if we cannot effectively integrate acquired operations
5. 05Our indebtedness could adversely affect our financial health and could harm our ability to react to changes to our business and prevent us from fulfilling our obligations under our indebtedness39% rewritten
6. 06To service our indebtedness, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control and any failure to meet our debt service obligations could harm our business, financial condition and results of operations
7. 07The terms of the senior secured credit facility and indentures governing the Notes may restrict our current and future operations, particularly our ability to respond to changes or to take certain actions
8. 08We are dependent on our executive officers, senior management team and highly trained employees and any work stoppage, difficulty hiring similar employees, or ineffective succession planning could adversely affect our business
9. 09Public health crises, and health pandemics, epidemics and outbreaks could adversely affect our business48% rewritten

Risks Related to our Operations

1. 10Our sales to manufacturers of aircraft are cyclical, and a downturn in sales to these manufacturers may adversely affect us45% rewritten
2. 11Our business is dependent on the availability of certain components and raw materials from suppliers
3. 12We face significant competition21% rewritten
4. 13Climate-related regulations designed to address climate change may result in additional compliance costs28% rewritten
5. 14Our operations depend on our manufacturing facilities, which are subject to physical and other risks that could disrupt production
6. 15Operations and sales outside of the United States may be subject to additional risks30% rewritten
7. 16We are subject to certain unique business risks as a result of supplying equipment and services to the U.S. Government
8. 17U.S. Government contracts can be terminated by the U.S. Government at its convenience without cause or significant notice. Termination for convenience provisions provide only for recovery of costs incurred or committed, settlement expenses and profit on the work completed prior to termination24% rewritten
9. 18Our business may be adversely affected if we would lose our government or industry approvals or if more stringent government regulations are enacted or if industry oversight is increased
10. 19We could incur substantial costs as a result of data protection concerns42% rewritten
11. 20The risks in this area continue to grow, and we expect cyber events will continue to accelerate in frequency and impact as threat actors increasingly use AI and other techniques to circumvent security controls, evade detection and remove forensic evidenceNew

Risks Related to Legal and Regulatory Matters

1. 21We could incur substantial costs as a result of violations of or liabilities under environmental laws and regulations
2. 22We may be subject to periodic litigation and regulatory proceedings, which may adversely affect our business and financial performance
3. 23We could be adversely affected by the impact of failure, misuse or quality issues of our productsNew

Risks Related to Financial Matters

1. 24We have recorded a significant amount of intangible assets, which may never generate the returns we expect38% rewritten
2. 25We may be subject to risks relating to changes in our tax rates or exposure to additional income tax liabilities
3. 26We do not regularly declare and pay quarterly or annual cash dividends on our stock35% rewritten

General Risks

1. 27Our commercial business is sensitive to the number of flight hours that our customers’ planes spend aloft, the size and age of the worldwide aircraft fleet and our customers’ profitability. These items are, in turn, affected by general economic and geopolitical and other worldwide conditions47% rewritten
2. 28U.S. military spending is dependent upon the U.S. defense budget
3. 29Our stock price may be volatile, and an investment in our common stock could suffer a decline in value