CLEVELAND, Aug. 4, 2020
/PRNewswire/ -- TransDigm Group Incorporated (NYSE: TDG), a
leading global designer, producer and supplier of highly engineered
aircraft components, today reported results for the third quarter
ended June 27, 2020, which were significantly impacted by the
COVID-19 pandemic.
Third quarter highlights include:
- Net sales of $1,022 million, down
32.8% from $1,521 million in the
prior year's quarter;
- Loss from continuing operations of $(5)
million;
- Loss per share from continuing operations of $(0.09);
- EBITDA As Defined of $424
million, representing a margin of 41.5%;
- EBITDA As Defined of $424 million
is down 35.7% from $659 million in
the prior year's quarter;
- Adjusted earnings per share of $1.54, down 66.9% from $4.65; and
- Strong operating cash flow generation of $397 million.
Fiscal 2020 financial guidance remains suspended due to COVID-19
pandemic.
Quarter-to-Date Results
Net sales for the quarter declined 32.8%, or $499 million, to $1,022
million from $1,521 million in
the comparable quarter a year ago. In the current quarter, all
sales represent organic sales.
Loss from continuing operations for the quarter was $(5) million, a decrease of 103.9% to compared to
income from continuing operations of $128
million in the comparable quarter a year ago. The decrease
in income from continuing operations primarily reflects the decline
in net sales described above, along with COVID-19 restructuring
costs, higher interest expense and a higher tax rate due to
discrete one-time tax charges being taken during the quarter. This
decline in income from continuing operations was offset partially
by lower acquisition-related expenses.
Adjusted net income for the quarter decreased 66.4% to
$88 million, or $1.54 per share, from $262
million, or $4.65 per share,
in the comparable quarter a year ago.
EBITDA for the quarter decreased 24.8% to $366 million from $487
million for the comparable quarter a year ago. EBITDA As
Defined for the period decreased 35.7% to $424 million compared with $659 million in the comparable quarter a year
ago. EBITDA As Defined as a percentage of net sales for the quarter
was 41.5%.
"Throughout our third fiscal quarter much of the global fleet
was grounded and there was a substantial reduction in both
passenger demand and air traffic due to the COVID-19 pandemic and
the ensuing widespread lockdowns. Despite these headwinds, I am
pleased that we were able to achieve an EBITDA As Defined margin of
41.5% as a result of swift and purposeful management of our cost
structure," stated Kevin Stein, TransDigm
Group's President and Chief Executive Officer. "These
circumstances required actions that were necessary, but difficult
to implement. We are better positioned as a Company to endure and
emerge strongly from the ongoing weakness in our primary commercial
end markets. In the past few months, initial signs of a recovery in
commercial aerospace have emerged with commercial airlines bringing
more of the fleet back into service. We will remain focused and
diligent in our management of the details as much uncertainty
remains about the duration of the pandemic and pace of
recovery."
The effective tax rate in the current quarter was negatively
impacted due to the unfavorable economic impact of the COVID-19
pandemic on the Company's net interest deduction limitation and a
discrete cumulative adjustment associated with excess tax benefits
from share based payments. The current effective tax rate was
113.5% compared to 30.0% for the comparable period of fiscal 2019.
For the full 2020 fiscal year, the Company expects the effective
tax rate to be 17% to 19%.
During the quarter, on April 8,
2020, TransDigm successfully completed a private offering of
$1.1 billion of 8.00% Senior Secured
Notes due 2025. Additionally, on April 17,
2020, TransDigm successfully completed a private offering of
an additional $400 million of 6.25%
Senior Secured Notes due 2026 at a price equal to 101% of the par
value, or an effective interest rate of approximately 6.05%.
Year-to-Date Results
Net sales for the thirty-nine week period ended June 27, 2020 rose 6.7%, or $248 million, to $3,930
million from $3,682 million in
the comparable period a year ago. Organic sales declined 9.6%.
Acquisition sales growth over the comparable period a year ago was
$603 million, all of which are
attributable to Esterline.
Income from continuing operations for the thirty-nine week
period ended June 27, 2020 increased
5.3% to $552 million compared to
$524 million in the comparable period
a year ago. The effective tax rate for the thirty-nine week period
was positively impacted by a one-time provisional benefit from
dividend and dividend equivalent payments made in the period, as
well as the enactment of the CARES Act which included favorable
modifications to the interest deduction limitation. The effective
tax rate in the current thirty-nine week period was 16.9% compared
to 24.9% for the comparable period of fiscal 2019. The balance of
the increase in net income from continuing operations primarily
reflects the increase in net sales described above and lower
acquisition-related expenses. This growth in income from continuing
operations was offset partially by higher interest expense and
one-time refinancing costs, higher operating costs and amortization
expense attributable to Esterline and COVID-19 restructuring
costs.
GAAP earnings per share were reduced in fiscal 2020 and 2019 by
$3.22 per share and $0.43 per share, respectively, as a result of
dividend and dividend equivalent payments made during each
year.
Adjusted net income for the thirty-nine week period ended
June 27, 2020 decreased 6.6% to
$664 million, or $11.57 per share, from $711 million, or $12.64 per share, in the comparable period a year
ago.
EBITDA for the thirty-nine week period ended June 27, 2020 increased 13.1% to $1,637 million from $1,448
million for the comparable period a year ago. EBITDA As
Defined for the period increased 4.0% to $1,780 million compared with $1,712 million in the comparable period a year
ago. EBITDA As Defined as a percentage of net sales for the current
period was 45.3%.
Please see the attached tables for a reconciliation of (loss)
income from continuing operations 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 2020 Outlook
Given the considerable uncertainty around the extent and
duration of business disruptions related to the COVID-19 pandemic,
and how that will impact operations, the Company suspended its
previously provided fiscal year 2020 guidance.
Earnings Conference Call
TransDigm Group will host a conference call for investors and
security analysts on August 4, 2020, beginning at 11:00 a.m., Eastern Time. To join the call, dial
(833) 397-0943 and enter the passcode 2588806. International
callers should dial (720) 405-3217 and use the same passcode. 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 passcode 2588806.
International callers should dial (404) 537-3406 and use the same
passcode.
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, 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, aircraft audio 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, 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 2020 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
that could cause TransDigm Group's 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 impact that
the COVID-19 pandemic has on the TransDigm Group's business,
results of operations, financial condition and liquidity; the
sensitivity of TransDigm Group's business to the number of flight
hours that its customers' planes spend aloft and its customers'
profitability, both of which are affected by general economic
conditions; future geopolitical or other worldwide events;
cyber-security threats and natural disasters; TransDigm Group's
reliance on certain customers; the U.S. defense budget and risks
associated with being a government supplier including government
audits and investigations; failure to maintain government or
industry approvals; failure to complete or successfully integrate
acquisitions, including TransDigm Group's acquisition of Esterline;
TransDigm Group's indebtedness; potential environmental
liabilities; liabilities arising in connection with litigation;
increases in raw material costs, taxes and labor costs that cannot
be recovered in product pricing; risks and costs associated with
TransDigm Group's 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 for the fiscal year ended September 30,
2019 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:
|
|
Investor
Relations
|
|
|
216-706-2945
|
|
|
ir@transdigm.com
|
|
|
|
TRANSDIGM GROUP
INCORPORATED
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF (LOSS) INCOME
|
|
|
|
|
FOR THE THIRTEEN
AND THIRTY-NINE WEEK PERIODS ENDED
|
|
Table
1
|
JUNE 27, 2020 AND
JUNE 29, 2019
|
|
|
|
|
(Amounts in
millions, except per share amounts)
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Thirteen Week
Periods Ended
|
|
Thirty-Nine Week
Periods Ended
|
|
|
June 27,
2020
|
|
June 29,
2019
|
|
June 27,
2020
|
|
June 29,
2019
|
NET SALES
|
|
$
|
1,022
|
|
|
$
|
1,521
|
|
|
$
|
3,930
|
|
|
$
|
3,682
|
|
COST OF
SALES
|
|
531
|
|
|
808
|
|
|
1,819
|
|
|
1,755
|
|
GROSS
PROFIT
|
|
491
|
|
|
713
|
|
|
2,111
|
|
|
1,927
|
|
SELLING AND
ADMINISTRATIVE EXPENSES
|
|
163
|
|
|
252
|
|
|
544
|
|
|
535
|
|
AMORTIZATION OF
INTANGIBLE ASSETS
|
|
42
|
|
|
38
|
|
|
128
|
|
|
80
|
|
INCOME FROM
OPERATIONS
|
|
286
|
|
|
423
|
|
|
1,439
|
|
|
1,312
|
|
INTEREST EXPENSE -
NET
|
|
262
|
|
|
241
|
|
|
762
|
|
|
614
|
|
REFINANCING
COSTS
|
|
1
|
|
|
—
|
|
|
27
|
|
|
3
|
|
OTHER
INCOME
|
|
(11)
|
|
|
(1)
|
|
|
(14)
|
|
|
(1)
|
|
INCOME FROM
CONTINUING OPERATIONS BEFORE INCOME TAXES
|
|
34
|
|
|
183
|
|
|
664
|
|
|
696
|
|
INCOME TAX
PROVISION
|
|
39
|
|
|
55
|
|
|
112
|
|
|
172
|
|
(LOSS) INCOME FROM
CONTINUING OPERATIONS
|
|
(5)
|
|
|
128
|
|
|
552
|
|
|
524
|
|
(LOSS) INCOME FROM
DISCONTINUED OPERATIONS, NET OF TAX
|
|
(1)
|
|
|
17
|
|
|
66
|
|
|
19
|
|
NET (LOSS)
INCOME
|
|
(6)
|
|
|
145
|
|
|
618
|
|
|
543
|
|
LESS: NET INCOME
ATTRIBUTABLE TO NONCONTROLLING INTERESTS
|
|
—
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
NET (LOSS) INCOME
ATTRIBUTABLE TO TD GROUP
|
|
$
|
(6)
|
|
|
$
|
145
|
|
|
$
|
617
|
|
|
$
|
543
|
|
NET (LOSS) INCOME
APPLICABLE TO TD GROUP COMMON STOCKHOLDERS
|
|
$
|
(6)
|
|
|
$
|
145
|
|
|
$
|
432
|
|
|
$
|
519
|
|
(Loss) Earnings per
share attributable to TD Group common stockholders:
|
|
|
|
|
|
|
|
|
(Loss) Earnings per
share from continuing operations - basic and diluted
|
|
$
|
(0.09)
|
|
|
$
|
2.27
|
|
|
$
|
6.38
|
|
|
$
|
8.87
|
|
(Loss) Earnings per
share from discontinued operations - basic and diluted
|
|
(0.01)
|
|
|
0.30
|
|
|
1.15
|
|
|
0.35
|
|
(Loss) Earnings per
share
|
|
$
|
(0.10)
|
|
|
$
|
2.57
|
|
|
$
|
7.53
|
|
|
$
|
9.22
|
|
Cash dividends
declared per common share
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
32.50
|
|
|
$
|
—
|
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
57.3
|
|
|
56.3
|
|
|
57.4
|
|
|
56.3
|
|
TRANSDIGM GROUP
INCORPORATED
|
SUPPLEMENTAL
INFORMATION - RECONCILIATION OF EBITDA,
|
EBITDA AS DEFINED
TO (LOSS) INCOME FROM CONTINUING OPERATIONS
|
FOR THE THIRTEEN
AND THIRTY-NINE WEEK PERIODS ENDED
|
JUNE 27, 2020 AND
JUNE 29, 2019
|
(Amounts in
millions, except per share amounts)
|
Table
2
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Week
Periods Ended
|
|
Thirty-Nine Week
Periods Ended
|
|
|
June 27,
2020
|
|
June 29,
2019
|
|
June 27,
2020
|
|
June 29,
2019
|
(Loss) Income from
continuing operations
|
|
$
|
(5)
|
|
|
$
|
128
|
|
|
$
|
552
|
|
|
$
|
524
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization expense
|
|
70
|
|
|
63
|
|
|
211
|
|
|
138
|
|
Interest expense,
net
|
|
262
|
|
|
241
|
|
|
762
|
|
|
614
|
|
Income tax
provision
|
|
39
|
|
|
55
|
|
|
112
|
|
|
172
|
|
EBITDA
|
|
366
|
|
|
487
|
|
|
1,637
|
|
|
1,448
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related
expenses and adjustments (1)
|
|
3
|
|
|
135
|
|
|
19
|
|
|
185
|
|
Non-cash stock
compensation expense (2)
|
|
21
|
|
|
32
|
|
|
59
|
|
|
70
|
|
Refinancing costs
(3)
|
|
1
|
|
|
—
|
|
|
27
|
|
|
3
|
|
COVID-19 & 737 MAX
restructuring costs (4)
|
|
30
|
|
|
—
|
|
|
30
|
|
|
—
|
|
Other, net
(5)
|
|
3
|
|
|
5
|
|
|
8
|
|
|
6
|
|
Gross Adjustments to
EBITDA
|
|
58
|
|
|
172
|
|
|
143
|
|
|
264
|
|
EBITDA As
Defined
|
|
$
|
424
|
|
|
$
|
659
|
|
|
$
|
1,780
|
|
|
$
|
1,712
|
|
EBITDA As Defined,
Margin (6)
|
|
41.5
|
%
|
|
43.3
|
%
|
|
45.3
|
%
|
|
46.5
|
%
|
|
|
(1)
|
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.
|
|
|
(2)
|
Represents the
compensation expense recognized by TD Group under our stock
incentive plans.
|
|
|
(3)
|
Represents costs
expensed related to debt financing activities, including new
issuances, extinguishments, refinancings and amendments to existing
agreements.
|
|
|
(4)
|
Represents
restructuring costs related to the Company's cost reduction
measures in response to the COVID-19 pandemic ($24 million) and the
737 MAX production rate changes ($3 million). These were costs
related to the Company's actions to reduce its workforce to align
with customer demand. This also includes $3 million of incremental
costs related to the pandemic that are not expected to recur once
the pandemic has subsided and are clearly separable from normal
operations (e.g., additional cleaning and disinfecting of
facilities by contractors above and beyond normal requirements,
personal protective equipment, etc.).
|
|
|
(5)
|
Primarily represents
foreign currency transaction gain or loss, payroll withholding
taxes related to special dividend and dividend equivalent payments
and stock option exercises, non-service related pension costs,
deferred compensation and gain or loss on sale of fixed
assets.
|
|
|
(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 (LOSS)
EARNINGS PER SHARE TO
|
|
|
|
|
ADJUSTED EARNINGS
PER SHARE
|
|
|
|
|
FOR THE THIRTEEN
AND THIRTY-NINE WEEK PERIODS ENDED
|
Table
3
|
JUNE 27, 2020 AND
JUNE 29, 2019
|
(Amounts in
millions, except per share amounts)
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Thirteen Week
Periods Ended
|
|
Thirty-Nine Week
Periods Ended
|
|
|
June 27,
2020
|
|
June 29,
2019
|
|
June 27,
2020
|
|
June 29,
2019
|
Reported (Loss)
Earnings Per Share
|
|
|
|
|
|
|
|
|
(Loss) Income from
continuing operations
|
|
$
|
(5)
|
|
|
$
|
128
|
|
|
$
|
552
|
|
|
$
|
524
|
|
Less: Net income
attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
Net (loss) income
from continuing operations attributable to TD Group
|
|
(5)
|
|
|
128
|
|
|
551
|
|
|
524
|
|
Less: Special
dividends declared or paid on participating securities, including
dividend equivalent payments
|
|
—
|
|
|
—
|
|
|
(185)
|
|
|
(24)
|
|
|
|
(5)
|
|
|
128
|
|
|
366
|
|
|
500
|
|
(Loss) Income from
discontinued operations, net of tax
|
|
(1)
|
|
|
17
|
|
|
66
|
|
|
19
|
|
Net (loss) income
applicable to TD Group common stockholders - basic and
diluted
|
|
$
|
(6)
|
|
|
$
|
145
|
|
|
$
|
432
|
|
|
$
|
519
|
|
Weighted-average
shares outstanding under the two-class method
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
|
54.1
|
|
|
53.2
|
|
|
53.9
|
|
|
53.0
|
|
Vested options deemed
participating securities
|
|
3.2
|
|
|
3.1
|
|
|
3.5
|
|
|
3.3
|
|
Total shares for
basic and diluted (loss) earnings per share
|
|
57.3
|
|
|
56.3
|
|
|
57.4
|
|
|
56.3
|
|
(Loss) Earnings per
share from continuing operations - basic and diluted
|
|
$
|
(0.09)
|
|
|
$
|
2.27
|
|
|
$
|
6.38
|
|
|
$
|
8.87
|
|
(Loss) Earnings per
share from discontinued operations - basic and diluted
|
|
(0.01)
|
|
|
0.30
|
|
|
1.15
|
|
|
0.35
|
|
(Loss) Earnings per
share
|
|
$
|
(0.10)
|
|
|
$
|
2.57
|
|
|
$
|
7.53
|
|
|
$
|
9.22
|
|
Adjusted Earnings
Per Share
|
|
|
|
|
Net (loss) income
from continuing operations attributable to TD Group
|
|
$
|
(5)
|
|
|
$
|
128
|
|
|
$
|
551
|
|
|
$
|
524
|
|
Gross adjustments to
EBITDA
|
|
58
|
|
|
172
|
|
|
143
|
|
|
264
|
|
Purchase accounting
backlog amortization
|
|
14
|
|
|
14
|
|
|
42
|
|
|
19
|
|
Tax adjustment
(1)
|
|
21
|
|
|
(52)
|
|
|
(72)
|
|
|
(96)
|
|
Adjusted net
income
|
|
$
|
88
|
|
|
$
|
262
|
|
|
$
|
664
|
|
|
$
|
711
|
|
Adjusted diluted
earnings per share under the two-class method
|
|
$
|
1.54
|
|
|
$
|
4.65
|
|
|
$
|
11.57
|
|
|
$
|
12.64
|
|
Diluted (Loss)
Earnings Per Share to Adjusted Earnings Per Share
|
|
|
|
|
Diluted (loss)
earnings per share from continuing operations
|
|
$
|
(0.09)
|
|
|
$
|
2.27
|
|
|
$
|
6.38
|
|
|
$
|
8.87
|
|
Adjustments to
diluted (loss) earnings per share:
|
|
|
|
|
|
|
|
|
Inclusion of the dividend equivalent payments
|
|
—
|
|
|
—
|
|
|
3.22
|
|
|
0.43
|
|
Acquisition-related expenses
|
|
0.24
|
|
|
1.88
|
|
|
0.82
|
|
|
2.64
|
|
Non-cash
stock compensation expense
|
|
0.31
|
|
|
0.40
|
|
|
0.80
|
|
|
0.91
|
|
Refinancing costs
|
|
0.01
|
|
|
—
|
|
|
0.37
|
|
|
0.04
|
|
Change in income tax
provision due to excess tax benefits on stock
compensation
|
|
0.58
|
|
|
0.04
|
|
|
(0.56)
|
|
|
(0.32)
|
|
COVID-19
& 737 MAX restructuring costs
|
|
0.43
|
|
|
—
|
|
|
0.42
|
|
|
—
|
|
Other,
net
|
|
0.06
|
|
|
0.06
|
|
|
0.12
|
|
|
0.07
|
|
Adjusted earnings per
share
|
|
$
|
1.54
|
|
|
$
|
4.65
|
|
|
$
|
11.57
|
|
|
$
|
12.64
|
|
|
|
(1)
|
For the thirteen and
thirty-nine week periods ended June 27, 2020 and June 29, 2019, the
Tax adjustment represents the tax effect of the adjustments at the
applicable effective tax rate, as well as the impact on the
effective tax rate when excluding the excess tax benefits on stock
option exercises. Stock compensation expense is excluded from
adjusted net income and therefore we have excluded the impact that
the excess tax benefits on stock option exercises have on the
effective tax rate for determining adjusted net income.
|
TRANSDIGM GROUP
INCORPORATED
|
|
|
|
|
SUPPLEMENTAL
INFORMATION - RECONCILIATION OF NET CASH
|
|
Table
4
|
PROVIDED BY
OPERATING ACTIVITIES TO EBITDA,
|
|
EBITDA AS
DEFINED
|
|
FOR THE
THIRTY-NINE WEEK PERIODS ENDED
|
|
JUNE 27, 2020 AND
JUNE 29, 2019
|
|
|
|
(Amounts in
millions)
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
Thirty-Nine Week
Periods Ended
|
|
|
June 27,
2020
|
|
June 29,
2019
|
Net cash provided by
operating activities
|
|
$
|
991
|
|
|
$
|
768
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
Changes in assets and
liabilities, net of effects from acquisitions of
businesses
|
|
(134)
|
|
|
(8)
|
|
Interest expense, net
(1)
|
|
737
|
|
|
594
|
|
Income tax provision -
current
|
|
129
|
|
|
167
|
|
Non-cash stock
compensation expense (2)
|
|
(59)
|
|
|
(70)
|
|
Refinancing costs
(3)
|
|
(27)
|
|
|
(3)
|
|
EBITDA
|
|
1,637
|
|
|
1,448
|
|
Adjustments:
|
|
|
|
|
Acquisition-related
expenses (4)
|
|
19
|
|
|
185
|
|
Non-cash stock
compensation expense (2)
|
|
59
|
|
|
70
|
|
Refinancing costs
(3)
|
|
27
|
|
|
3
|
|
COVID-19 & 737 MAX
restructuring costs (5)
|
|
30
|
|
|
—
|
|
Other, net
(6)
|
|
8
|
|
|
6
|
|
EBITDA As
Defined
|
|
$
|
1,780
|
|
|
$
|
1,712
|
|
|
|
(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 costs
expensed related to debt financing activities, including new
issuances, extinguishments, refinancings and amendments to existing
agreements.
|
|
|
(4)
|
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.
|
|
|
(5)
|
Represents
restructuring costs related to the Company's cost reduction
measures in response to the COVID-19 pandemic ($24 million) and the
737 MAX production rate changes ($3 million). These were costs
related to the Company's actions to reduce its workforce to align
with customer demand. This also includes $3 million of incremental
costs related to the pandemic that are not expected to recur once
the pandemic has subsided and are clearly separable from normal
operations (e.g., additional cleaning and disinfecting of
facilities by contractors above and beyond normal requirements,
personal protective equipment, etc.).
|
|
|
(6)
|
Primarily represents
foreign currency transaction gain or loss, payroll withholding
taxes related to special dividend and dividend equivalent payments
and stock option exercises, non-service related pension costs,
deferred compensation and gain or loss on sale of fixed
assets.
|
TRANSDIGM GROUP
INCORPORATED
|
|
|
|
SUPPLEMENTAL
INFORMATION - BALANCE SHEET DATA
|
|
Table
5
|
(Amounts in
millions)
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
June 27,
2020
|
|
September 30,
2019
|
Cash and cash
equivalents
|
|
$
|
4,549
|
|
|
$
|
1,467
|
|
Trade accounts
receivable - net
|
|
726
|
|
|
1,068
|
|
Inventories -
net
|
|
1,344
|
|
|
1,233
|
|
Current portion of
long-term debt
|
|
279
|
|
|
80
|
|
Short-term
borrowings-trade receivable securitization facility
|
|
350
|
|
|
350
|
|
Accounts
payable
|
|
231
|
|
|
276
|
|
Accrued current
liabilities
|
|
791
|
|
|
675
|
|
Long-term
debt
|
|
19,410
|
|
|
16,469
|
|
Total TD Group
stockholders' deficit
|
|
(4,183)
|
|
|
(2,894)
|
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/transdigm-group-reports-fiscal-2020-third-quarter-results-301105257.html
SOURCE TransDigm Group Inc.