TransDigm Group (TDG) reported some remarkable results for its fiscal 2009 first quarter, when compared to the same period last fiscal year. Net sales of $181.3 million were up 11.1% (organic sales growth - which excludes recent acquisitions - was 2.7%). The gross profit margin rose from 54.0% to 57.5%, while SG&A expenses declined from 11.0% of sales to 10.0%. The operating income margin went from 41.0% to 45.7%. And, aided by a lower tax rate of 35.0% versus 36.4%, net income as a percent of sales was 21.8%, up from 16.5%.

The bottom line of all this is that diluted EPS for the quarter were $0.78 versus $0.54, up 44.4%.

Part of the Company's stellar performance can be attributed to the fact that - reacting to the weakening of the commercial aerospace sector - it has already reduced headcount by some 9%, and will lower it further in months to come. Another reason for the improvement in profitability is that it didn't deliver as much lower-margined product destined for Boeing (BA) (commercial) aircraft during the quarter due to the IAM strike at that company. Other contributors included reduced interest expense, because of declining interest rates, and the reinstatement of R&D tax credits.

Defense sales (about a quarter of TDG's revenues, the balance being commercial) rose by 19% during the quarter and were believed to have been aided by the significant amount of MRO (maintenance, repair and overhaul) activity now required to keep the equipment going. Commercial OEM (original equipment manufacturer) sales were up about 6% in the quarter, while the smaller biz jet/RJ sub-set (which is near 15% of total revenues) was about flat; however, commercial MRO revenues were down some 5%, the probable result of the grounding of older aircraft, coupled with a reduction in the flight schedules.

The Company's current 2009 outlook: revenues in the range of $758 million to $783 million; net income in the range of $149 million to $158 million; EPS in the range of $2.96 to $3.13. The shares used in the EPS calculation are down from 51.2 million to 50.4 million, in part because TDG has been buying back its stock (383,600 shares were repurchased during the last quarter for $11.8 million = $30.76/share, and TDG still has an open authorization to buy an additional $38.2 million of stock).

Zacks currently has a Buy recommendation on TDG.