CLEVELAND, Feb. 4, 2013 /PRNewswire/ -- TransDigm Group
Incorporated (NYSE: TDG), a leading global designer, producer and
supplier of highly engineered aircraft components, today reported
results for the first quarter ended December
29, 2012.
Highlights for the first quarter include:
- Net sales of $430.4 million,
up 22.1% from $352.5
million;
- EBITDA As Defined of $200.9
million, up 15.4% from $174.1
million;
- Net income of $74.2 million,
up 13.9% from $65.1 million;
- Earnings per share of $0.66,
down 42.6% from $1.15; and
- Adjusted earnings per share of $1.51, up 6.3% from $1.42.
Net sales for the quarter rose 22.1% to $430.4 million from $352.5
million in the comparable quarter a year ago. The
favorable contribution from the acquisitions of Harco, AmSafe and
Aero-Instruments accounted for the majority of the increase in net
sales. Organic net sales growth was up slightly.
Net income for the quarter rose 13.9% to $74.2 million, or $0.66 per share, compared to $65.1 million, or $1.15 per share, in the comparable quarter a year
ago. Earnings per share were reduced by $0.70 per share representing dividend equivalent
payments made in the quarter compared to $0.06 per share in the comparable quarter a year
ago. The increase in net income primarily reflects the growth
in net sales described above partially offset by higher interest
expense. The increase in interest expense was primarily due to an
increase in outstanding borrowings from $3.1
billion to $4.3 billion to
partially fund the acquisition of AmSafe in February 2012 and fund the dividend paid in
November 2012. The current quarter
included acquisition-related and non-cash compensation costs of
$8.1 million, net of tax, or
$0.15 per share. The comparable
quarter a year ago reflected acquisition-related and non-cash
compensation costs of $11.4 million,
net of tax, or $0.21 per share.
Adjusted net income for the quarter rose 7.6% to $82.3 million, or $1.51 per share, from $76.5 million, or $1.42 per share, in the comparable quarter a year
ago.
EBITDA for the quarter increased 16.7% to $190.3 million from $163.0
million for the comparable quarter a year ago. EBITDA
As Defined for the period increased 15.4% to $200.9 million compared with $174.1 million in the quarter a year ago.
EBITDA As Defined as a percentage of net sales for the quarter was
46.7%.
During the quarter the Company successfully completed an
offering of $550 million of 5.50%
senior subordinated notes due 2020 and added an incremental term
loan of $150 million in October 2012. The additional debt was used to pay
a special dividend of $12.85 per
share in November 2012.
"Given the uncertain global economic and defense market
environments, we believe our 2013 fiscal year started out
reasonably well," stated W. Nicholas
Howley, TransDigm Group's Chairman and Chief Executive
Officer. "Although most of our growth in the first quarter was
driven by recent acquisitions, assuming we owned the same mix of
businesses in both periods, our commercial OEM, commercial
aftermarket and defense revenues all experienced modest growth in
the quarter. After adjusting for acquisition dilution of
approximately 3 margin points and the impact of a favorable
contract settlement in the prior quarter of about three-fourths of
a margin point, our EBITDA As Defined margin increased compared to
the prior quarter. We remain confident in the strength of our
business and operating strategy to generate intrinsic shareholder
value through the current uncertain market environment."
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 2013 Outlook
Mr. Howley continued, "We are maintaining the mid-point of our
annual sales and EBITDA As Defined guidance but are narrowing the
range to reflect our current market view. In addition, we are
increasing our earnings per share guidance to reflect a more
favorable tax outlook, while keeping in mind our continuing caution
regarding the uncertain worldwide economic and aerospace market
conditions."
The Company is adjusting full year fiscal 2013 guidance, which
assumes no additional acquisitions, as follows:
- Net sales are anticipated to be in the range of $1,820 million to $1,880 million, maintaining
mid-point of $1,850 million
(previously in the range of $1,800 million
to $1,900 million) compared with $1,700 million in fiscal 2012;
- EBITDA As Defined is anticipated to be in the range of
$874 million to $902 million,
maintaining mid-point of $888 million
(previously in the range of $864 million to
$912 million) compared with $809
million in fiscal 2012;
- Net income is anticipated to be in the range of $344 million to $356 million (previously in the
range of $336 million to $360
million) compared with $325
million in fiscal 2012;
- Earnings per share are expected to be in the range of
$5.60 to $5.84 per share (previously
in the range of $5.44 to $5.88 per
share) compared with $5.97 per share
in fiscal 2012; and
- Adjusted earnings per share are expected to be in the range of
$6.74 to $6.98 per share (previously
in the range of $6.54 to $6.98 per
share) compared with $6.67 per share
in fiscal 2012.
Conference Call
TransDigm Group will host a conference call for investors and
security analysts on February 4,
2013, beginning at 11:00 a.m.,
Eastern Time. To join the call, dial (888) 873-4896 and
enter the pass code 70443788. International callers should
dial (617) 213-8850 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 two weeks by
dialing (888) 286-8010 and entering the pass code 93913956.
International callers should dial (617) 801-6888 and use the same
pass code.
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, cockpit security components
and systems, specialized cockpit displays, aircraft audio systems,
specialized lavatory components, seatbelts and safety restraints,
engineered interior surfaces and lighting and control
technology.
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.
Because of these limitations, EBITDA and EBITDA As Defined
should not be considered as measures of discretionary cash
available to us to invest in the growth of our business.
Management compensates for these limitations by not viewing EBITDA
or EBITDA As Defined in isolation and specifically by using other
GAAP measures, such as net income, net sales and operating profit,
to measure our operating performance. Neither EBITDA nor
EBITDA As Defined is a measurement of financial performance under
GAAP, and neither should be considered as an alternative to net
income or cash flow from operations determined in accordance with
GAAP. Our calculation of EBITDA and EBITDA As Defined may not be
comparable to the calculation of similarly titled measures reported
by other companies.
Forward-Looking Statements
Statements in this press release that are not historical facts,
including statements under the heading "Fiscal 2013 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 terrorist attacks; 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; and other 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 WEEK PERIODS ENDED
|
Table
1
|
DECEMBER 29, 2012 AND DECEMBER 31,
2011
|
(Amounts in thousands, except per share
amounts)
|
(Unaudited)
|
|
|
|
|
Thirteen Week Periods Ended
|
|
|
|
December 29,
|
|
December 31,
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
NET
SALES
|
|
|
$
430,418
|
|
$
352,473
|
|
|
|
|
|
|
COST OF
SALES
|
|
|
191,871
|
|
152,918
|
|
|
|
|
|
|
GROSS
PROFIT
|
|
|
238,547
|
|
199,555
|
|
|
|
|
|
|
SELLING
AND ADMINISTRATIVE EXPENSES
|
|
|
55,161
|
|
41,850
|
AMORTIZATION OF INTANGIBLE ASSETS
|
|
|
10,540
|
|
12,439
|
|
|
|
|
|
|
INCOME
FROM OPERATIONS
|
|
|
172,846
|
|
145,266
|
|
|
|
|
|
|
INTEREST
EXPENSE - Net
|
|
|
62,876
|
|
49,061
|
|
|
|
|
|
|
INCOME
BEFORE INCOME TAXES
|
|
|
109,970
|
|
96,205
|
|
|
|
|
|
|
INCOME TAX
PROVISION
|
|
|
35,800
|
|
31,100
|
|
|
|
|
|
|
NET
INCOME
|
|
|
$
74,170
|
|
$
65,105
|
|
|
|
|
|
|
NET INCOME
APPLICABLE TO COMMON STOCK
|
|
|
$
36,040
|
|
$
61,806
|
|
|
|
|
|
|
Net
earnings per share:
|
|
|
|
|
|
Basic and diluted
|
|
|
$
0.66
|
|
$
1.15
|
Cash dividends paid per common share
|
|
|
$
12.85
|
|
$
-
|
|
|
|
|
|
|
Weighted-average shares outstanding:
|
|
|
|
|
|
Basic and
diluted
|
|
|
54,453
|
|
53,882
|
TRANSDIGM GROUP INCORPORATED
|
SUPPLEMENTAL INFORMATION - RECONCILIATION OF
EBITDA,
|
EBITDA
AS DEFINED TO NET INCOME
|
FOR THE
THIRTEEN WEEK PERIODS ENDED
|
DECEMBER 29, 2012 AND DECEMBER 31,
2011
|
|
|
Table
2
|
(Amounts in thousands)
|
|
(Unaudited)
|
|
|
|
Thirteen Week Periods Ended
|
|
|
December 29,
2012
|
|
December 31,
2011
|
|
|
|
|
|
Net
income
|
|
$
74,170
|
|
$
65,105
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
Depreciation and amortization expense
|
|
17,452
|
|
17,782
|
Interest
expense, net
|
|
62,876
|
|
49,061
|
Income tax
provision
|
|
35,800
|
|
31,100
|
|
|
|
|
|
EBITDA
|
|
190,298
|
|
163,048
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
Acquisition related expenses and adjustments
(1)
|
|
3,467
|
|
7,452
|
Stock
option expense(2)
|
|
7,131
|
|
3,648
|
|
|
|
|
|
Gross
Adjustments to EBITDA
|
|
10,598
|
|
11,100
|
|
|
|
|
|
EBITDA As
Defined
|
|
$
200,896
|
|
$
174,148
|
EBITDA As
Defined, Margin (3)
|
|
46.7%
|
|
49.4%
|
|
|
|
|
|
(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 option plans.
|
(3) The EBITDA As Defined margin
represents the amount of EBITDA As Defined as a percentage of
sales.
|
TRANSDIGM GROUP INCORPORATED
|
SUPPLEMENTAL INFORMATION - RECONCILIATION
OF
|
Table
3
|
REPORTED EARNINGS PER SHARE
TO
|
ADJUSTED EARNINGS PER SHARE
|
FOR THE
THIRTEEN WEEK PERIODS ENDED
|
DECEMBER 29, 2012 AND DECEMBER 31,
2011
|
|
(Amounts in thousands, except per share
amounts)
|
|
(Unaudited)
|
|
|
|
Thirteen Week
Periods
Ended
|
Reported Earnings Per Share
|
|
December 29,
2012
|
|
December 31,
2011
|
|
|
|
|
|
Net
income
|
|
$
74,170
|
|
$
65,105
|
Less:
dividends paid on participating securities
|
|
(38,130)
|
|
(3,299)
|
Net income
applicable to common stock - basic and diluted
|
|
$
36,040
|
|
$
61,806
|
|
|
|
|
|
Weighted-average shares outstanding
under
|
|
|
|
|
the two-class
method:
|
|
|
|
|
Weighted
average common shares outstanding
|
|
51,796
|
|
50,431
|
Vested
options deemed participating securities
|
|
2,657
|
|
3,451
|
Total
shares for basic and diluted earnings per share
|
|
54,453
|
|
53,882
|
|
|
|
|
|
Basic and
diluted earnings per share
|
|
$
0.66
|
|
$
1.15
|
|
|
|
|
|
|
|
|
Adjusted Earnings Per Share
|
|
|
|
|
|
|
Net
income
|
|
$
74,170
|
|
$
65,105
|
|
|
|
|
|
Gross
adjustments to EBITDA
|
|
10,598
|
|
11,100
|
Purchase
accounting backlog amortization
|
|
1,461
|
|
5,687
|
Tax
adjustment
|
|
(3,926)
|
|
(5,427)
|
|
|
|
|
|
Adjusted
net income
|
|
$
82,303
|
|
$
76,465
|
|
|
|
|
|
|
|
|
|
|
Adjusted
diluted earnings per share under the two-class method
|
|
$
1.51
|
|
$
1.42
|
TRANSDIGM GROUP INCORPORATED
|
SUPPLEMENTAL INFORMATION - RECONCILIATION
OF
|
|
Table
4
|
DILUTED
EARNINGS PER SHARE TO
|
ADJUSTED EARNINGS PER SHARE
|
(Amounts in thousands, except per share
amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Thirteen Week Periods Ended
|
|
|
December 29, 2012
|
|
December 31, 2011
|
|
|
|
|
|
Net
income
|
|
$
74,170
|
|
$
65,105
|
Less: dividends paid on participating
securities
|
|
(38,130)
|
|
(3,299)
|
Net income
applicable to common stock - basic and diluted
|
|
$
36,040
|
|
$
61,806
|
|
|
|
|
|
Weighted
average common shares outstanding
|
|
51,796
|
|
50,431
|
|
|
|
|
|
Vested
options deemed participating securities
|
|
2,657
|
|
3,451
|
|
|
|
|
|
Weighted-average shares outstanding
|
|
54,453
|
|
53,882
|
|
|
|
|
|
Diluted
earnings per share
|
|
$
0.66
|
|
$
1.15
|
|
|
|
|
|
Adjustments to diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
Inclusion of the dividend equivalent
payment
|
|
0.70
|
|
0.06
|
|
|
|
|
|
Non-cash compensation costs
|
|
0.09
|
|
0.05
|
|
|
|
|
|
Acquisition related expenses
|
|
0.06
|
|
0.16
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per
share
|
|
$
1.51
|
|
$
1.42
|
TRANSDIGM GROUP INCORPORATED
|
SUPPLEMENTAL INFORMATION - RECONCILIATION OF NET
CASH
|
Table
5
|
PROVIDED BY OPERATING ACTIVITIES TO EBITDA, EBITDA
AS DEFINED
|
FOR THE
THIRTEEN WEEK PERIODS ENDED
|
DECEMBER 29, 2012 AND DECEMBER 31,
2011
|
|
(Amounts in thousands, except per share
amounts)
|
|
(Unaudited)
|
|
|
|
Thirteen Week Periods
Ended
|
|
|
December 29,
2012
|
|
December 31,
2011
|
|
|
|
|
|
Net Cash
Provided by Operating Activities
|
|
$
98,115
|
|
$
68,094
|
Adjustments:
|
|
|
|
|
Changes in
assets and liabilities, net of effects from acquisitions of
businesses
|
|
(20,996)
|
|
7,307
|
Interest
expense - net (1)
|
|
59,080
|
|
46,445
|
Income tax
provision - current
|
|
34,542
|
|
35,800
|
Non-cash
equity compensation (2)
|
|
(7,131)
|
|
(3,648)
|
Excess tax
benefit from exercise of stock options
|
|
26,688
|
|
9,050
|
|
|
|
|
|
EBITDA
|
|
190,298
|
|
163,048
|
Adjustments:
|
|
|
|
|
Acquisition related expenses(3)
|
|
3,467
|
|
7,452
|
Stock
option expense(2)
|
|
7,131
|
|
3,648
|
EBITDA As
Defined
|
|
$
200,896
|
|
$
174,148
|
|
|
|
|
|
(1)Represents interest expense excluding
the amortization of debt issue costs and note premium and
discount.
|
(2)Represents the compensation expense
recognized by TD Group under our stock option 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.
|
TRANSDIGM GROUP INCORPORATED
|
SUPPLEMENTAL INFORMATION - BALANCE SHEET
DATA
|
Table
6
|
(Amounts in thousands)
|
(Unaudited)
|
|
|
|
December 29, 2012
|
|
September 30, 2012
|
|
|
|
|
|
Cash and
cash equivalents
|
|
$
554,431
|
|
$
440,524
|
Trade
accounts receivable - Net
|
|
218,660
|
|
235,783
|
Inventories - Net
|
|
332,468
|
|
320,503
|
|
|
|
|
|
Current
portion of long-term debt
|
|
22,000
|
|
20,500
|
Accounts
payable
|
|
69,550
|
|
74,178
|
Accrued
liabilities
|
|
142,153
|
|
139,237
|
|
|
|
|
|
Long-term
debt
|
|
4,297,125
|
|
3,598,625
|
|
|
|
|
|
Total
stockholders' equity
|
|
598,847
|
|
1,218,834
|
SOURCE TransDigm Group Incorporated