CLEVELAND, May 1, 2018
/PRNewswire/ -- TransDigm Group Incorporated (NYSE: TDG), a
leading global designer, producer and supplier of highly engineered
aircraft components, today reported results for the second quarter
ended March 31, 2018.
Highlights for the second quarter include:
- Net sales of $933.1 million,
up 7.4% from $868.7 million;
- Net income from continuing operations of $201.8 million, up 29.6% from $155.7 million;
- Earnings per share from continuing operations of
$3.63, up 30.6% from $2.78;
- EBITDA As Defined of $463.1
million, up 9.8% from $421.7
million;
- Adjusted earnings per share of $3.79, up 25.1% from $3.03; and
- Upward revision to fiscal 2018 sales, EBITDA As Defined and
adjusted earnings per share guidance.
Net sales for the quarter rose 7.4%, or $64.4 million, to $933.1
million from $868.7 million in
the comparable quarter a year ago. Organic sales growth was
6.6%.
Net income from continuing operations for the quarter rose 29.6%
to $201.8 million, or $3.63 per share, compared to $155.7 million, or $2.78 per share, in the comparable quarter a year
ago. The current quarter was positively impacted by a lower
effective tax rate due to the U.S. Tax Cuts and Jobs Act (tax
reform) of 18.3% compared to 27.7% in the second quarter of
2017. The balance of the increase in net income primarily
reflects the increase in net sales described above and improvements
to our operating margin resulting from the strength of our
proprietary products and continued productivity efforts. This
growth in net income was partially offset by higher interest
expense.
Net loss from discontinued operations in the quarter was
$5.6 million, or $0.10 loss per share attributable to the sale of
Schroth.
Adjusted net income for the quarter rose 24.5% to $210.8 million, or $3.79 per share, from $169.3 million, or $3.03 per share, in the comparable quarter a year
ago. Adjusted earnings per share in the current fiscal year
includes $0.41 of favorable impact
from the enactment of tax reform. Excluding this favorable tax
impact, current earnings per share of $3.38 increased 11.6% over the prior year.
EBITDA for the quarter increased 10.5% to $439.4 million from $397.7
million for the comparable quarter a year ago. EBITDA
As Defined for the period increased 9.8% to $463.1 million compared with $421.7 million in the comparable quarter a year
ago. EBITDA As Defined as a percentage of net sales for the
quarter was 49.6%.
"We are pleased with our second quarter and fiscal first
half results," stated W. Nicholas
Howley, TransDigm Group's Executive Chairman. "Our
focused value driven operating strategy continues to generate real
intrinsic shareholder value. The commercial aftermarket
revenues were again quite encouraging. During the quarter we
announced and have now closed the acquisition of two proprietary
aerospace businesses for a purchase price of approximately
$575 million."
On January 26, 2018, TransDigm
completed the sale of Schroth in a management buyout to a private
equity fund and certain members of Schroth management for
approximately $61 million.
On March 15, 2018, TransDigm
completed the acquisition of the Kirkhill business from Esterline
for approximately $50 million.
Kirkhill is a leading supplier of highly engineered elastomers used
in a variety of most commercial transport and military
platforms.
Subsequent to the quarter, on April 24,
2018, TransDigm completed the acquisition of Extant
Components Group Holdings, Inc. a portfolio company of Warburg
Pincus LLC, for approximately $525
million. Extant exclusively licenses or acquires
proprietary aftermarket focused products from leading aerospace and
defense OEM's. Extant then supports these products over the
significant remaining useful lives of the aircraft on which the
equipment is installed.
Year-to-Date Results
Net sales for the twenty-six week period ended March 31,
2018 rose 5.8% to $1,781.0 million
from $1,682.7 million in the
comparable period last year. Organic net sales growth was
4.8%.
Net income from continuing operations for the twenty-six week
period ended March 31, 2018 increased 87.2% to $513.9 million, or $8.23 per share, compared with $274.6 million, or $3.17 per share, in the comparable period last
year. The current twenty-six week period was positively impacted by
a lower effective tax rate due to tax reform. The current
effective tax rate was a benefit of 17.3% compared to a provision
of 22.5% for the first half of fiscal 2017. The balance of the
increase in net income primarily reflects growth in net sales
described above, lower refinancing costs and lower
acquisition-related costs, as well as improvements to our operating
margin resulting from the strength of our proprietary products and
continued productivity efforts. This growth in net income was
partially offset by higher interest expense due to an increase in
the level of outstanding borrowings to $11.8
billion from $11.2 billion
outstanding in the comparable period last year.
Earnings per share were reduced in both 2018 and 2017 by
$1.01 per share and $1.71 per share, respectively, representing
dividend equivalent payments made during each year.
Net loss from discontinued operations in the twenty-six week
period ended March 31, 2018 was $2.8
million, or $0.05 loss per
share.
Adjusted net income for the twenty-six week period ended
March 31, 2018 rose 66.9% to
$520.9 million, or $9.37 per share, from $312.0 million, or $5.55 per share, in the comparable period a year
ago. Adjusted earnings per share in the current fiscal year
includes $3.37 of favorable impact
from the enactment of tax reform. Excluding this favorable tax
impact, current earnings per share of $6.00 increased 8.1% over the prior year.
EBITDA for the twenty-six week period ended March 31, 2018 increased 14.1% to $822.0 million from $720.7
million for the comparable period a year ago. EBITDA
As Defined for the period increased 7.7% to $864.7 million compared with $802.9 million in the comparable period a year
ago. EBITDA As Defined as a percentage of net sales for the
period was 48.5%.
Please see the attached tables for a reconciliation of net
income to EBITDA, EBITDA As Defined, and adjusted net income; a
reconciliation of net cash provided by operating activities to
EBITDA and EBITDA As Defined, and a reconciliation of earnings per
share to adjusted earnings per share for the periods discussed in
this press release.
Fiscal 2018 Outlook
Mr. Howley continued, "We are updating our full year guidance to
include the two recent acquisitions and our strong operating
performance to date. At the mid-point, we are increasing our
revenue guidance by $95 million,
EBITDA as Defined guidance by $25
million, and our adjusted earnings per share guidance by
$0.40 per share."
Assuming no additional acquisitions, TransDigm now expects
fiscal 2018 financial guidance to be as follows:
- Net sales are anticipated to be in the range of $3,740 million to $3,820
million compared with $3,504
million in fiscal 2017;
- Net income from continuing operations is anticipated to be in
the range of $902 million to
$938 million compared with
$629 million in fiscal 2017;
- Earnings per share from continuing operations are expected to
be in the range of $15.22 to
$15.86 per share based upon weighted
average shares outstanding of 55.6 compared with $8.45 per share in fiscal 2017;
- EBITDA As Defined is anticipated to be in the range of
$1,830 million to $1,880 million compared with $1,711 million in fiscal 2017; and
- Adjusted earnings per share are expected to be in the range of
$17.35 to $17.99 per share compared with $12.38 per share in fiscal 2017.
Please see the attached table 6 for a reconciliation of EBITDA,
EBITDA As Defined to net income and reported earnings per share to
adjusted earnings per share guidance mid-point estimated for the
fiscal year ending September 30,
2018. Additionally, please see the attached table 7 for
comparison of the current fiscal year 2018 guidance versus the
previously issued fiscal year 2018 guidance.
Earnings Conference Call
TransDigm Group will host a conference call for investors and
security analysts on May 1, 2018, beginning at 9:30 a.m., Eastern Time. To join the call, dial
(888) 558-9538 and enter the pass code 8869137. International
callers should dial (760) 666-3183 and use the same pass code. A
live audio webcast can be accessed online at
http://www.transdigm.com. A slide presentation will also be
available for reference during the conference call; go to the
investor relations page of our website and click on
"Presentations."
The call will be archived on the website and available for
replay at approximately 2:00 p.m., Eastern
Time. A telephone replay will be available for one week by
dialing (855) 859-2056 and entering the pass code 8869137.
International callers should dial (404) 537-3406 and use the same
pass code.
Potential Financing
TransDigm Group today announced its intention to (i) incur
$700 million in additional tranche E
term loans, (ii) reprice its existing tranche E term loans and
tranche F term loans and (iii) extend its existing revolving credit
facility to December 2022, in each
case from existing and new lenders under the senior secured credit
facilities. In connection with the incremental term loans and
repricing, TransDigm Group may also make certain other
modifications to the terms of the senior secured credit
facilities. In addition to the $700
million of new term loans, TransDigm Group or one if its
subsidiaries may also seek to raise approximately $500 million of new subordinated debt.
TransDigm Group intends to use the net proceeds from the
incremental term loan and any new subordinated debt to replenish
the cash used to fund the purchase price for its acquisitions of
the Kirkhill elastomers business and Extant Components Group
Holding, Inc. This cash and the remainder of the net proceeds
will be used for general corporate purposes, including potential
future acquisitions, dividends or repurchases under its stock
repurchase program.
In connection with the incremental term loan, TransDigm Group
will make a presentation to its lenders on Tuesday, May 1, 2018 beginning at 1:30 p.m., Eastern Time. Additional information
will be available via Credit Suisse Securities (USA) LLC.
About TransDigm Group
TransDigm Group, through its wholly-owned subsidiaries, is a
leading global designer, producer and supplier of highly engineered
aircraft components for use on nearly all commercial and military
aircraft in service today. Major product offerings, substantially
all of which are ultimately provided to end-users in the aerospace
industry, include mechanical/electro-mechanical actuators and
controls, ignition systems and engine technology, specialized pumps
and valves, power conditioning devices, specialized AC/DC electric
motors and generators, NiCad batteries and chargers, engineered
latching and locking devices, rods and locking devices, engineered
connectors and elastomers, databus and power controls, cockpit
security components and systems, specialized cockpit displays,
aircraft audio systems, specialized lavatory components, seat belts
and safety restraints, engineered interior surfaces and related
components, lighting and control technology, military personnel
parachutes, high performance hoists, winches and lifting devices,
and cargo loading, handling and delivery systems.
Non-GAAP Supplemental Information
EBITDA, EBITDA As Defined, EBITDA As Defined Margin, adjusted
net income and adjusted earnings per share are non-GAAP financial
measures presented in this press release as supplemental
disclosures to net income and reported results. TransDigm Group
defines EBITDA as earnings before interest, taxes, depreciation and
amortization and defines EBITDA As Defined as EBITDA plus certain
non-operating items, refinancing costs, acquisition-related costs,
transaction-related costs and non-cash charges incurred in
connection with certain employee benefit plans. TransDigm Group
defines adjusted net income as net income plus purchase accounting
backlog amortization expense, effects from the sale on businesses,
refinancing costs, acquisition-related costs, transaction-related
costs and non-cash charges incurred in connection with certain
employee benefit plans. EBITDA As Defined Margin represents EBITDA
As Defined as a percentage of net sales. TransDigm Group defines
adjusted diluted earnings per share as adjusted net income divided
by the total shares for basic and diluted earnings per share. For
more information regarding the computation of EBITDA, EBITDA As
Defined and adjusted net income and adjusted earnings per share,
please see the attached financial tables.
TransDigm Group presents these non-GAAP financial measures
because it believes that they are useful indicators of its
operating performance. TransDigm Group believes that EBITDA is
useful to investors because it is frequently used by securities
analysts, investors and other interested parties to measure
operating performance among companies with different capital
structures, effective tax rates and tax attributes, capitalized
asset values and employee compensation structures, all of which can
vary substantially from company to company. In addition, analysts,
rating agencies and others use EBITDA to evaluate a company's
ability to incur and service debt. EBITDA As Defined is used to
measure TransDigm Inc.'s compliance with the financial covenant
contained in its credit facility. TransDigm Group's management also
uses EBITDA As Defined to review and assess its operating
performance, to prepare its annual budget and financial projections
and to review and evaluate its management team in connection with
employee incentive programs. Moreover, TransDigm Group's management
uses EBITDA As Defined to evaluate acquisitions and as a liquidity
measure. In addition, TransDigm Group's management uses adjusted
net income as a measure of comparable operating performance between
time periods and among companies as it is reflective of changes in
pricing decisions, cost controls and other factors that affect
operating performance.
None of EBITDA, EBITDA As Defined, EBITDA As Defined Margin,
adjusted net income or adjusted earnings per share is a measurement
of financial performance under GAAP and such financial measures
should not be considered as an alternative to net income, operating
income, earnings per share, cash flows from operating activities or
other measures of performance determined in accordance with GAAP.
In addition, TransDigm Group's calculation of these non-GAAP
financial measures may not be comparable to the calculation of
similarly titled measures reported by other companies.
Although we use EBITDA and EBITDA As Defined as measures to
assess the performance of our business and for the other purposes
set forth above, the use of these non-GAAP financial measures as
analytical tools has limitations, and you should not consider any
of them in isolation, or as a substitute for analysis of our
results of operations as reported in accordance with GAAP. Some of
these limitations are:
- neither EBITDA nor EBITDA As Defined reflects the significant
interest expense, or the cash requirements necessary to service
interest payments, on our indebtedness;
- although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often have to be
replaced in the future, and neither EBITDA nor EBITDA As Defined
reflects any cash requirements for such replacements;
- the omission of the substantial amortization expense associated
with our intangible assets further limits the usefulness of EBITDA
and EBITDA As Defined;
- neither EBITDA nor EBITDA As Defined includes the payment of
taxes, which is a necessary element of our operations; and
- EBITDA As Defined excludes the cash expense we have incurred to
integrate acquired businesses into our operations, which is a
necessary element of certain of our acquisitions.
Forward-Looking Statements
Statements in this press release that are not historical facts,
including statements under the heading "Fiscal 2018 Outlook," are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995.Words such as "believe,"
"may," "will," "should," "expect," "intend," "plan," "predict,"
"anticipate," "estimate," or "continue" and other words and terms
of similar meaning may identify forward-looking statements.
All forward-looking statements involve risks and uncertainties
which could affect TransDigm Group's actual results and could cause
its actual results to differ materially from those expressed or
implied in any forward-looking statements made by, or on behalf of,
TransDigm Group. These risks and uncertainties include but are not
limited to: the sensitivity of our business to the number of flight
hours that our customers' planes spend aloft and our customers'
profitability, both of which are affected by general economic
conditions; future geopolitical or worldwide events; cyber-security
threats and natural disasters; our reliance on certain customers;
the U.S. defense budget and risks associated with being a
government supplier; failure to maintain government or industry
approvals; failure to complete or successfully integrate
acquisitions; our substantial indebtedness; potential environmental
liabilities; increases in raw material costs, taxes and labor costs
that cannot be recovered in product pricing; risks and costs
associated with our international sales and operations; and other
risk factors. Further information regarding the important factors
that could cause actual results to differ materially from projected
results can be found in TransDigm Group's Annual Report on Form
10-K and other reports that TransDigm Group or its subsidiaries
have filed with the Securities and Exchange Commission. Except as
required by law, TransDigm Group undertakes no obligation to revise
or update the forward-looking statements contained in this press
release.
Contact:
|
|
Liza Sabol
|
|
|
Investor
Relations
|
|
|
216-706-2945
|
|
|
ir@transdigm.com
|
TRANSDIGM GROUP
INCORPORATED
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
FOR THE THIRTEEN
AND TWENTY-SIX WEEK PERIODS ENDED
|
MARCH 31, 2018 AND
APRIL 1, 2017
|
(Amounts in
thousands, except per share amounts)
|
Table
1
|
(Unaudited)
|
|
|
Thirteen Week
Periods Ended
|
|
Twenty-Six Week
Periods Ended
|
|
|
March 31,
2018
|
|
April 1,
2017
|
|
March 31,
2018
|
|
April 1,
2017
|
NET SALES
|
|
$
|
933,070
|
|
$
|
868,728
|
|
$
|
1,781,030
|
|
$
|
1,682,746
|
COST OF
SALES
|
|
398,996
|
|
379,291
|
|
770,306
|
|
749,054
|
GROSS
PROFIT
|
|
534,074
|
|
489,437
|
|
1,010,724
|
|
933,692
|
SELLING AND
ADMINISTRATIVE EXPENSES
|
|
107,526
|
|
100,857
|
|
214,054
|
|
202,572
|
AMORTIZATION OF
INTANGIBLE ASSETS
|
|
17,457
|
|
22,032
|
|
34,569
|
|
47,563
|
INCOME FROM
OPERATIONS
|
|
409,091
|
|
366,548
|
|
762,101
|
|
683,557
|
INTEREST EXPENSE -
NET
|
|
161,266
|
|
147,842
|
|
322,199
|
|
293,846
|
REFINANCING
COSTS
|
|
638
|
|
3,507
|
|
1,751
|
|
35,591
|
INCOME FROM
CONTINUING OPERATIONS
BEFORE INCOME TAXES
|
|
247,187
|
|
215,199
|
|
438,151
|
|
354,120
|
INCOME TAX
PROVISION
|
|
45,347
|
|
59,508
|
|
(75,700)
|
|
79,558
|
INCOME FROM
CONTINUING OPERATIONS
|
|
$
|
201,840
|
|
$
|
155,691
|
|
$
|
513,851
|
|
$
|
274,562
|
LOSS FROM
DISCONTINUED OPERATIONS,
NET OF TAX
|
|
(5,562)
|
|
(186)
|
|
(2,798)
|
|
(186)
|
NET INCOME
|
|
$
|
196,278
|
|
$
|
155,505
|
|
$
|
511,053
|
|
$
|
274,376
|
NET INCOME APPLICABLE
TO COMMON
STOCK
|
|
$
|
196,278
|
|
$
|
155,505
|
|
$
|
454,905
|
|
$
|
178,405
|
Net earnings per
share:
|
|
|
|
|
|
|
|
|
Net earnings per
share from continuing operations--
basic and diluted
|
|
$
|
3.63
|
|
$
|
2.78
|
|
$
|
8.23
|
|
$
|
3.17
|
Net loss per share
from discontinued operations--
basic and diluted
|
|
(0.10)
|
|
—
|
|
(0.05)
|
|
—
|
Net earnings per
share
|
|
$
|
3.53
|
|
$
|
2.78
|
|
$
|
8.18
|
|
$
|
3.17
|
Cash dividends paid
per common share
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
24.00
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
55,605
|
|
55,894
|
|
55,599
|
|
56,211
|
TRANSDIGM GROUP
INCORPORATED
|
SUPPLEMENTAL
INFORMATION - RECONCILIATION OF EBITDA,
|
EBITDA AS DEFINED
TO NET INCOME
|
FOR THE THIRTEEN
AND TWENTY-SIX WEEK PERIODS ENDED
|
MARCH 31, 2018 AND
APRIL 1, 2017
|
(Amounts in
thousands, except per share amounts)
|
Table
2
|
(Unaudited)
|
|
|
Thirteen Week
Periods Ended
|
|
Twenty-Six Week
Periods Ended
|
|
|
March 31,
2018
|
|
April 1,
2017
|
|
March 31,
2018
|
|
April 1,
2017
|
Net income
|
|
$
|
196,278
|
|
$
|
155,505
|
|
$
|
511,053
|
|
$
|
274,376
|
Less: Loss from
Discontinued Operations, net of tax (1)
|
|
(5,562)
|
|
(186)
|
|
(2,798)
|
|
(186)
|
Income from
Continuing Operations
|
|
201,840
|
|
155,691
|
|
513,851
|
|
274,562
|
Adjustments:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization expense
|
|
30,970
|
|
34,661
|
|
61,609
|
|
72,708
|
Interest expense,
net
|
|
161,266
|
|
147,842
|
|
322,199
|
|
293,846
|
Income tax
provision
|
|
45,347
|
|
59,508
|
|
(75,700)
|
|
79,558
|
EBITDA
|
|
439,423
|
|
397,702
|
|
821,959
|
|
720,674
|
Adjustments:
|
|
|
|
|
|
|
|
|
Acquisition-related
expenses and adjustments (2)
|
|
4,485
|
|
7,752
|
|
6,559
|
|
26,320
|
Non-cash stock
compensation expense (3)
|
|
11,590
|
|
11,105
|
|
22,703
|
|
21,126
|
Refinancing costs
(4)
|
|
638
|
|
3,507
|
|
1,751
|
|
35,591
|
Other, net
(5)
|
|
6,987
|
|
1,610
|
|
11,684
|
|
(841)
|
Gross Adjustments to
EBITDA
|
|
23,700
|
|
23,974
|
|
42,697
|
|
82,196
|
EBITDA As
Defined
|
|
$
|
463,123
|
|
$
|
421,676
|
|
$
|
864,656
|
|
$
|
802,870
|
EBITDA As Defined,
Margin (6)
|
|
49.6%
|
|
48.5%
|
|
48.5%
|
|
47.7%
|
|
(1)
|
During the fourth
quarter of fiscal 2017, the Company committed to disposing of
Schroth in connection with the settlement of a Department of
Justice investigation into the competitive effects of the
acquisition. Therefore, Schroth was classified as
held-for-sale and as discontinued operations beginning September
30, 2017 for all periods presented. The Company acquired Schroth in
February 2017. On January 26, 2018, the Company completed the sale
of Schroth in a management buyout to a private equity fund and
certain members of Schroth management for approximately $61 million
in cash.
|
|
(2)
|
Represents accounting
adjustments to inventory associated with acquisitions of businesses
and product lines that were charged to cost of sales when the
inventory was sold; costs incurred to integrate acquired businesses
and product lines into TD Group's operations, facility relocation
costs and other acquisition-related costs; transaction-related
costs comprising deal fees; legal, financial and tax due diligence
expenses; and valuation costs that are required to be expensed as
incurred.
|
|
(3)
|
Represents the
compensation expense recognized by TD Group under our stock
incentive plans.
|
|
(4)
|
Represents costs
expensed related to debt financing activities, including new
issuances, extinguishments, refinancings and amendments to existing
agreements.
|
|
(5)
|
Primarily represents
foreign currency transaction gain or loss, payroll withholding
taxes related to dividend equivalent payments and stock option
exercises and gain or loss on sale of fixed assets. Prior to
the fourth quarter of fiscal 2017, foreign currency transaction
gain or loss other than related to intercompany loans was not
included in the adjustments to EBITDA, as the foreign currency
transaction gain or loss was immaterial during those periods.
Therefore, the prior periods presented herein were adjusted to
conform to the current year presentation.
|
|
(6)
|
The EBITDA As Defined
margin represents the amount of EBITDA As Defined as a percentage
of sales.
|
TRANSDIGM GROUP
INCORPORATED
|
SUPPLEMENTAL
INFORMATION - RECONCILIATION OF
|
REPORTED EARNINGS
PER SHARE TO
|
ADJUSTED EARNINGS
PER SHARE
|
FOR THE THIRTEEN
AND TWENTY-SIX WEEK PERIODS ENDED
|
MARCH 31, 2018 AND
APRIL 1, 2017
|
(Amounts in
thousands, except per share amounts)
|
Table
3
|
(Unaudited)
|
|
|
Thirteen Week
Periods Ended
|
|
Twenty-Six Week
Periods Ended
|
|
|
March 31,
2018
|
|
April 1,
2017
|
|
March 31,
2018
|
|
April 1,
2017
|
Reported Earnings
Per Share
|
|
|
|
|
|
|
|
|
Net income from
continuing operations
|
|
$
|
201,840
|
|
$
|
155,691
|
|
$
|
513,851
|
|
$
|
274,562
|
Less: dividends on
participating securities
|
|
—
|
|
—
|
|
(56,148)
|
|
(95,971)
|
|
|
201,840
|
|
155,691
|
|
457,703
|
|
178,591
|
Net loss from
discontinued operations
|
|
(5,562)
|
|
(186)
|
|
(2,798)
|
|
(186)
|
Net income applicable
to common stock -
basic and
diluted
|
|
$
|
196,278
|
|
$
|
155,505
|
|
$
|
454,905
|
|
$
|
178,405
|
Weighted-average
shares outstanding under the
two-class method
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
|
52,229
|
|
52,849
|
|
52,127
|
|
53,108
|
Vested options deemed
participating securities
|
|
3,376
|
|
3,045
|
|
3,472
|
|
3,103
|
Total shares for
basic and diluted earnings per share
|
|
55,605
|
|
55,894
|
|
55,599
|
|
56,211
|
Net earnings per
share from continuing operations--
basic and diluted
|
|
$
|
3.63
|
|
$
|
2.78
|
|
$
|
8.23
|
|
$
|
3.17
|
Net loss per share
from discontinued operations--basic
and diluted
|
|
(0.10)
|
|
—
|
|
(0.05)
|
|
—
|
Basic and diluted
earnings per share
|
|
$
|
3.53
|
|
$
|
2.78
|
|
$
|
8.18
|
|
$
|
3.17
|
Adjusted Earnings
Per Share
|
|
|
|
|
|
|
|
|
|
|
Net income from
continuing operations
|
|
$
|
201,840
|
|
$
|
155,691
|
|
$
|
513,851
|
|
$
|
274,562
|
Gross adjustments to
EBITDA
|
|
23,700
|
|
23,974
|
|
42,697
|
|
82,196
|
Purchase accounting
backlog amortization
|
|
675
|
|
5,348
|
|
1,084
|
|
14,495
|
Tax
adjustment
|
|
(15,374)
|
|
(15,676)
|
|
(36,759)
|
|
(59,247)
|
Adjusted net
income
|
|
$
|
210,841
|
|
$
|
169,337
|
|
$
|
520,873
|
|
$
|
312,006
|
Adjusted diluted
earnings per share under the two-class
method
|
|
$
|
3.79
|
|
$
|
3.03
|
|
$
|
9.37
|
|
$
|
5.55
|
Diluted Earnings
Per Share to Adjusted Earnings
Per Share
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share from continuing operations
|
|
$
|
3.63
|
|
$
|
2.78
|
|
$
|
8.23
|
|
$
|
3.17
|
Adjustments to
diluted earnings per share:
|
|
|
|
|
|
|
|
|
Inclusion of the dividend equivalent payments
|
|
—
|
|
—
|
|
1.01
|
|
1.71
|
Non-cash
stock compensation expense
|
|
0.16
|
|
0.14
|
|
0.44
|
|
0.26
|
Acquisition-related expenses
|
|
0.07
|
|
0.17
|
|
0.15
|
|
0.51
|
Refinancing costs
|
|
0.01
|
|
0.04
|
|
0.03
|
|
0.44
|
Reduction in income tax provision net income per
common share related to ASU 2016-09
|
|
(0.18)
|
|
(0.12)
|
|
(0.72)
|
|
(0.52)
|
Other,
net
|
|
0.10
|
|
0.02
|
|
0.23
|
|
(0.02)
|
Adjusted
earnings per share
|
|
3.79
|
|
3.03
|
|
9.37
|
|
5.55
|
Less: Estimated impact
of tax reform
|
|
(0.41)
|
|
—
|
|
(3.37)
|
|
—
|
Adjusted earnings per
share excluding tax reform
|
|
$
|
3.38
|
|
$
|
3.03
|
|
$
|
6.00
|
|
$
|
5.55
|
TRANSDIGM GROUP
INCORPORATED
|
SUPPLEMENTAL
INFORMATION - RECONCILIATION OF NET CASH
|
PROVIDED BY
OPERATING ACTIVITIES TO EBITDA,
|
EBITDA AS
DEFINED
|
FOR THE TWENTY-SIX
WEEK PERIODS ENDED
|
MARCH 31, 2018 AND
APRIL 1, 2017
|
(Amounts in
thousands)
|
Table
4
|
(Unaudited)
|
|
|
Twenty-Six Week
Periods Ended
|
|
|
March 31,
2018
|
|
April 1,
2017
|
Net cash provided by
operating activities
|
|
$
|
453,684
|
|
$
|
390,500
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
Changes in assets and
liabilities, net of effects from acquisitions of
businesses
|
|
(9,404)
|
|
24,036
|
Interest expense -
net (1)
|
|
311,605
|
|
283,676
|
Income tax provision
- current
|
|
90,892
|
|
79,212
|
Non-cash stock
compensation expense (2)
|
|
(22,703)
|
|
(21,126)
|
Refinancing costs
(4)
|
|
(1,751)
|
|
(35,591)
|
EBITDA from
discontinued operations (6)
|
|
(364)
|
|
(33)
|
EBITDA
|
|
821,959
|
|
720,674
|
Adjustments:
|
|
|
|
|
Acquisition-related
expenses (3)
|
|
6,559
|
|
26,320
|
Non-cash stock
compensation expense (2)
|
|
22,703
|
|
21,126
|
Refinancing costs
(4)
|
|
1,751
|
|
35,591
|
Other, net
(5)
|
|
11,684
|
|
(841)
|
EBITDA As
Defined
|
|
$
|
864,656
|
|
$
|
802,870
|
|
(1)
|
Represents interest
expense excluding the amortization of debt issue costs and premium
and discount on debt.
|
|
(2)
|
Represents the
compensation expense recognized by TD Group under our stock
incentive plans.
|
|
(3)
|
Represents accounting
adjustments to inventory associated with acquisitions of businesses
and product lines that were charged to cost of sales when the
inventory was sold; costs incurred to integrate acquired businesses
and product lines into TD Group's operations, facility relocation
costs and other acquisition-related costs; transaction-related
costs comprising deal fees; legal, financial and tax due diligence
expenses and valuation costs that are required to be expensed as
incurred.
|
|
(4)
|
Represents costs
expensed related to debt financing activities, including new
issuances, extinguishments, refinancings and amendments to existing
agreements.
|
|
(5)
|
Primarily represents
foreign currency transaction gain or loss, payroll withholding
taxes related to dividend equivalent payments and stock option
exercises and gain or loss on sale of fixed assets. Prior to
the fourth quarter of fiscal 2017, foreign currency transaction
gain or loss other than related to intercompany loans was not
included in the adjustments to EBITDA, as the foreign currency
transaction gain or loss was immaterial during those periods.
Therefore, the prior periods presented herein were adjusted to
conform to the current year presentation.
|
|
(6)
|
During the fourth
quarter of 2017, the Company committed to disposing of Schroth in
connection with the settlement of a Department of Justice
investigation into the competitive effects of the
acquisition. Therefore, Schroth was classified as
held-for-sale and as discontinued operations beginning September
30, 2017 for all periods presented. The Company acquired Schroth in
February 2017. On January 26, 2018, the Company completed the sale
of Schroth in a management buyout to a private equity fund and
certain members of Schroth management for approximately $61 million
in cash.
|
TRANSDIGM GROUP
INCORPORATED
|
SUPPLEMENTAL
INFORMATION - BALANCE SHEET DATA
|
(Amounts in
thousands)
|
Table
5
|
(Unaudited)
|
|
|
March 31,
2018
|
|
September 30,
2017
|
Cash and cash
equivalents
|
|
$
|
1,011,007
|
|
$
|
650,561
|
Trade accounts
receivable - net
|
|
644,985
|
|
636,127
|
Inventories -
net
|
|
767,232
|
|
730,681
|
Current portion of
long-term debt, net of debt issuance costs, OID and
premium
|
|
69,147
|
|
69,454
|
Short-term
borrowings-trade receivable securitization facility, net of
debt issuance costs
|
|
299,833
|
|
299,587
|
Accounts
payable
|
|
151,709
|
|
148,761
|
Accrued current
liabilities
|
|
292,146
|
|
335,888
|
Long-term debt, net
of debt issuance costs, OID and premium
|
|
11,365,790
|
|
11,393,620
|
Total stockholders'
deficit
|
|
(2,309,337)
|
|
(2,951,204)
|
TRANSDIGM GROUP
INCORPORATED
|
SUPPLEMENTAL
INFORMATION - RECONCILIATION OF EBITDA,
|
EBITDA AS DEFINED
TO NET INCOME AND REPORTED EARNINGS
|
PER SHARE TO
ADJUSTED EARNINGS PER SHARE GUIDANCE MID-POINT
|
FOR THE FISCAL
YEAR ENDING SEPTEMBER 30, 2018
|
(Amounts in
millions, except per share amounts)
|
Table
6
|
(Unaudited)
|
|
|
Year
Ended
|
|
|
September
30,
|
|
|
2018
(guidance
|
|
|
mid-point)
|
Net income
|
|
$
|
920
|
Adjustments:
|
|
|
Depreciation and
amortization expense
|
|
130
|
Interest expense -
net
|
|
650
|
Income tax
provision
|
|
57
|
EBITDA
|
|
1,757
|
Adjustments:
|
|
|
Acquisition-related
expenses and adjustments (1) and other, net
(1)
|
|
48
|
Non-cash stock
compensation expense (1)
|
|
48
|
Refinancing costs
(1)
|
|
2
|
Gross Adjustments to
EBITDA
|
|
98
|
EBITDA As
Defined
|
|
$
|
1,855
|
EBITDA As Defined,
Margin (1)
|
|
49.1%
|
|
|
|
Earnings per
share
|
|
$
|
15.54
|
Adjustments to
earnings per share:
|
|
|
Inclusion of the
dividend equivalent payments
|
|
1.01
|
Non-cash stock
compensation expense
|
|
0.78
|
Acquisition-related
expenses and adjustments and other, net
|
|
0.78
|
Refinancing
costs
|
|
0.03
|
Reduction in income
tax provision net income per common share related to ASU
2016-09
|
|
(0.47)
|
Adjusted earnings per
share
|
|
$
|
17.67
|
|
|
|
Weighted-average
shares outstanding
|
|
55.6
|
|
|
(1) Refer
to Table 2 above for definitions of Non-GAAP measurement
adjustments.
|
TRANSDIGM GROUP
INCORPORATED
|
SUPPLEMENTAL
INFORMATION
|
CURRENT FISCAL
YEAR 2018 GUIDANCE VERSUS PRIOR FISCAL YEAR
2018 GUIDANCE
|
(Amounts in
millions, except per share amounts)
|
Table
7
|
(Unaudited)
|
|
Current
|
|
Prior
|
|
|
|
Fiscal Year
2018
|
|
Fiscal Year
2018
|
|
|
|
Guidance
|
|
Guidance
|
|
Change
at
|
|
|
Issued May 1,
2018
|
|
Issued February 6,
2018
|
|
Mid-Point
|
Sales
|
$3,740 to
$3,820
|
|
$3,645 to
$3,725
|
|
$95
|
|
|
|
|
|
|
GAAP Net Income from
Continuing Operations
|
$902 to
$938
|
|
$906 to
$942
|
|
$(4)
|
|
|
|
|
|
|
GAAP Earnings Per
Share from Continuing
Operations
|
$15.22 to
$15.86
|
|
$15.29 to
$15.93
|
|
$(0.07)
|
|
|
|
|
|
|
EBITDA As
Defined
|
$1,830 to
$1,880
|
|
$1,805 to
$1,855
|
|
$25
|
|
|
|
|
|
|
Adjusted Earnings Per
Share
|
$17.35 to
$17.99
|
|
$16.95 to
$17.59
|
|
$0.40
|
|
|
|
|
|
|
Weighted-Average
Shares Outstanding
|
55.6
|
|
55.6
|
|
—
|