CLEVELAND, Aug. 10, 2021
/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 July 3, 2021, which continue to be unfavorably impacted
by the COVID-19 pandemic. TransDigm also announced today that W.
Nicholas (Nick) Howley, previously
TransDigm's Executive Chairman, transitioned to non-executive
Chairman of the Board of Directors effective August 6, 2021. More information regarding
the transition is provided later in this release.
Third quarter highlights include:
- Net sales of $1,218 million, up
19% from $1,022 million in the prior
year's quarter;
- Income from continuing operations of $317 million, up from a loss from continuing
operations of $(5) million;
- Earnings per share from continuing operations of $5.43, up from a loss per share from continuing
operations of $(0.09);
- EBITDA As Defined of $559
million, up 32% from $424
million;
- EBITDA As Defined margin of 45.9%, representing sequential
improvement;
- Adjusted earnings per share of $3.33, up 116% from $1.54 in the prior year's quarter; and
- Strong operating cash flow generation of $252 million.
Fiscal 2021 financial guidance remains suspended at this
time.
Quarter-to-Date Results
Net sales for the quarter increased 19.2%, or $196 million, to $1,218
million from $1,022 million in
the comparable quarter a year ago. Organic sales growth was 15.1%.
Net acquisition and divestiture sales growth was $42 million over the comparable quarter a year
ago.
Income from continuing operations for the quarter increased
$322 million to $317 million from a loss from continuing
operations of $(5) million in the
comparable quarter a year ago. The increase in income from
continuing operations primarily reflects the increase in net sales
described above, lower effective tax rate, the net gain on sale
recognized as a result of the divestitures completed during the
third quarter of fiscal 2021, and lower COVID-19 restructuring
costs.
Adjusted net income for the quarter increased 120.5% to
$194 million, or $3.33 per share, from $88
million, or $1.54 per share,
in the comparable quarter a year ago.
EBITDA for the quarter increased 56.3% to $572 million from $366
million for the comparable quarter a year ago. EBITDA As
Defined for the quarter increased 31.8% to $559 million compared with $424 million in the comparable quarter a year
ago. EBITDA As Defined as a percentage of net sales for the quarter
was 45.9%, representing sequential improvement versus the second
fiscal quarter of 2021.
"Trends in the commercial aerospace industry are encouraging and
have increasingly shown signs of recovery in recent months with
vaccination rates expanding and air traffic improving, especially
in certain domestic markets. We also saw another quarter of
sequential improvement in our commercial aftermarket revenues,"
stated Kevin Stein, TransDigm
Group's President and Chief Executive Officer. "Additionally, I am
very pleased that we continue to sequentially expand our EBITDA As
Defined margin as a result of continued recovery in our commercial
aftermarket revenues as well as careful management of our cost
structure and focus on our operating strategy in this challenging
commercial environment."
The current quarter effective tax rate was (30.0)% compared to
113.5% for the comparable period of fiscal 2020. The effective tax
rate in the current quarter was positively impacted by the release
of the valuation allowance applicable to the net interest deduction
limitation carryforward and the discrete impact of excess tax
benefits associated with share-based payments. For the full 2021
fiscal year, the Company expects the effective tax rate to be in
the range of 0% to 3% and the adjusted tax rate to be in the range
of 18% to 20%.
On April 27, 2021, TransDigm
completed the divestiture of the Technical Airborne Components
business ("TAC") to Searchlight Capital Partners for approximately
$40 million in cash.
On June 30, 2021, TransDigm
completed the divestiture of its ScioTeq and TREALITY Simulation
Visual Systems ("ScioTeq and TREALITY") businesses to OpenGate
Capital for approximately $200
million in cash. ScioTeq and TREALITY were acquired by
TransDigm in March 2019 as part of
the Esterline Technologies acquisition.
The net gain on sale recognized during the third quarter of
fiscal 2021 as a result of the ScioTeq and TREALITY and TAC
divestitures was approximately $68 million.
The financial results of the ScioTeq and TREALITY and TAC
businesses for all periods under TransDigm's ownership will remain
classified as continuing operations in accordance with U.S.
generally accepted accounting principles.
Year-to-Date Results
Net sales for the thirty-nine week period ended July 3, 2021 declined 10.5%, or $411 million, to $3,519
million from $3,930 million in
the comparable period a year ago.
Income from continuing operations for the thirty-nine week
period ended July 3, 2021 was
$473 million, a decrease of 14.3%
compared to $552 million in the
comparable period a year ago. The decrease in income from
continuing operations primarily reflects the decline in net sales
described above, along with higher non-cash stock compensation
expense and interest expense, partially offset by a lower effective
tax rate and the net gain on sale recognized as a result of the
divestitures completed during the third quarter of fiscal 2021.
GAAP earnings per share were reduced in fiscal 2021 and 2020 by
$1.24 per share and $3.22 per share, respectively, as a result of
dividend equivalent payments made during each year. As a reminder,
GAAP earnings per share are reduced when TransDigm makes dividend
equivalent payments pursuant to the Company's stock option plans.
These dividend equivalent payments are made during the Company's
first fiscal quarter each year and also upon payment of any special
dividends.
Adjusted net income for the thirty-nine week period ended
July 3, 2021 decreased 30.7% to
$460 million, or $7.88 per share, from $664
million, or $11.57 per share,
in the comparable period a year ago.
EBITDA for the thirty-nine week period ended July 3, 2021 decreased 13.6% to $1,414 million from $1,637
million for the comparable period a year ago. EBITDA As
Defined for the period decreased 12.8% to $1,552 million compared with $1,780 million in the comparable period a year
ago. EBITDA As Defined as a percentage of net sales for the current
period was 44.1%.
Please see the attached tables for a reconciliation of income
(loss) 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 (loss) per share to adjusted earnings
per share for the periods discussed in this press release.
Fiscal 2021 Outlook
Given the considerable uncertainty around the extent and
duration of business disruptions related to the COVID-19 pandemic,
and how that will continue to impact operations, the Company will
not provide fiscal year 2021 guidance at this time.
Transition of W. Nicholas
Howley from Executive Chairman to Non-Executive
Chairman
TransDigm also announced today the transition of Mr. Howley from
TransDigm's Executive Chairman to Chairman of the Board of
Directors, effective August 6,
2021.
As Chairman and Chair of the Executive Committee, Mr. Howley
will continue to focus his efforts primarily on matters relating to
capital allocation, mergers and acquisitions, corporate strategy,
and leadership of the Board of Directors.
This transition timeline is accelerated by roughly one year, as
Mr. Howley's previous employment agreement anticipated his
transition from Executive Chairman to Chairman in December 2022. Mr. Howley intends to continue in
the Chairman role through at least fiscal 2024, which is the same
commitment time period as his previous employment agreement.
Mr. Howley stated, "The duration of my time commitment with
TransDigm will continue through at least 2024 - unchanged by this
action. The orderly transition outlined in my previous employment
agreement is proceeding well and ahead of schedule, and after three
years, now seems like an appropriate time to move into the next
phase. Over the past three years, Kevin and his team have dealt
well with many significant issues, including both the highly
successful integration of Esterline Technologies, our largest
acquisition to date, and the unprecedented COVID-19 situation. I
look forward to continuing as Chairman of the Board and working
with Kevin on TransDigm's consistent strategy of creating long term
intrinsic value for our shareholders. As part of this effort, I
will maintain a particular focus on capital allocation, mergers and
acquisitions, and major strategic issues."
"I have benefited tremendously as the CEO of TransDigm from the
overlap with Nick in his Executive Chairman role," stated
Kevin Stein, TransDigm Group's
President and Chief Executive Officer. "I look forward to a
continuing partnership with Nick in his role as Chairman and to
continuing together the exceptional value generating strategy that
has been the cornerstone of this organization since Nick and Doug Peacock founded TransDigm in
1993."
Earnings Conference Call
TransDigm Group will host a conference call for investors and
security analysts on August 10, 2021, beginning at
11:00 a.m., Eastern Time. To join the
call, dial (833) 397-0943 and enter the passcode 7297154.
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 7297154.
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, engineered audio, radio and antenna 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 recorded as corporate expenses, including
non-cash compensation charges incurred in connection with TransDigm
Group's stock incentive plans, restructuring costs related to
TransDigm Group's cost reduction measures in response to the
COVID-19 pandemic, foreign currency gains and losses,
acquisition-integration costs, acquisition transaction-related
expenses, and refinancing costs. TransDigm Group defines adjusted
net income as net income (loss) plus purchase accounting backlog
amortization expense, effects from the sale on businesses, non-cash
compensation charges incurred in connection with TransDigm Group's
stock incentive plans, restructuring costs related to TransDigm
Group's cost reduction measures in response to the COVID-19
pandemic, foreign currency gains and losses,
acquisition-integration costs, acquisition transaction-related
expenses, and refinancing costs. 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 U.S. 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 U.S. 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 U.S. 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 2021 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; 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 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, 2020 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
|
|
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ir@transdigm.com
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TRANSDIGM GROUP
INCORPORATED
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
|
|
|
FOR THE THIRTEEN
AND THIRTY-NINE WEEK PERIODS ENDED
|
|
Table
1
|
JULY 03, 2021 AND
JUNE 27, 2020
|
|
(Amounts in
millions, except per share amounts)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Thirteen Week
Periods Ended
|
|
Thirty-Nine Week
Periods Ended
|
|
|
July 3,
2021
|
|
June 27,
2020
|
|
July 3,
2021
|
|
June 27,
2020
|
NET SALES
|
|
$
|
1,218
|
|
|
$
|
1,022
|
|
|
$
|
3,519
|
|
|
$
|
3,930
|
|
COST OF
SALES
|
|
563
|
|
|
531
|
|
|
1,731
|
|
|
1,819
|
|
GROSS
PROFIT
|
|
655
|
|
|
491
|
|
|
1,788
|
|
|
2,111
|
|
SELLING AND
ADMINISTRATIVE EXPENSES
|
|
172
|
|
|
163
|
|
|
531
|
|
|
544
|
|
AMORTIZATION OF
INTANGIBLE ASSETS
|
|
36
|
|
|
42
|
|
|
101
|
|
|
128
|
|
INCOME FROM
OPERATIONS
|
|
447
|
|
|
286
|
|
|
1,156
|
|
|
1,439
|
|
INTEREST
EXPENSE—NET
|
|
263
|
|
|
262
|
|
|
798
|
|
|
762
|
|
REFINANCING
COSTS
|
|
13
|
|
|
1
|
|
|
36
|
|
|
27
|
|
OTHER
INCOME
|
|
(5)
|
|
|
(11)
|
|
|
(37)
|
|
|
(14)
|
|
GAIN ON SALE OF
BUSINESSES—NET
|
|
(68)
|
|
|
—
|
|
|
(69)
|
|
|
—
|
|
INCOME FROM
CONTINUING OPERATIONS
BEFORE INCOME TAXES
|
|
244
|
|
|
34
|
|
|
428
|
|
|
664
|
|
INCOME TAX (BENEFIT)
PROVISION
|
|
(73)
|
|
|
39
|
|
|
(45)
|
|
|
112
|
|
INCOME (LOSS) FROM
CONTINUING
OPERATIONS
|
|
317
|
|
|
(5)
|
|
|
473
|
|
|
552
|
|
(LOSS) INCOME FROM
DISCONTINUED
OPERATIONS, NET OF TAX
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
66
|
|
NET INCOME
(LOSS)
|
|
317
|
|
|
(6)
|
|
|
473
|
|
|
618
|
|
LESS: NET INCOME
ATTRIBUTABLE TO
NONCONTROLLING INTERESTS
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
(1)
|
|
NET INCOME (LOSS)
ATTRIBUTABLE TO TD
GROUP
|
|
$
|
317
|
|
|
$
|
(6)
|
|
|
$
|
471
|
|
|
$
|
617
|
|
NET INCOME (LOSS)
APPLICABLE TO TD
GROUP COMMON STOCKHOLDERS
|
|
$
|
317
|
|
|
$
|
(6)
|
|
|
$
|
398
|
|
|
$
|
432
|
|
Earnings (Loss) per
share attributable to TD Group
common stockholders:
|
|
|
|
|
|
|
|
|
Earnings (Loss) per
share from continuing operations—
basic and diluted
|
|
$
|
5.43
|
|
|
$
|
(0.09)
|
|
|
$
|
6.83
|
|
|
$
|
6.38
|
|
(Loss) Earnings per
share from discontinued
operations—basic and diluted
|
|
—
|
|
|
(0.01)
|
|
|
—
|
|
|
1.15
|
|
Earnings (Loss) per
share
|
|
$
|
5.43
|
|
|
$
|
(0.10)
|
|
|
$
|
6.83
|
|
|
$
|
7.53
|
|
Cash dividends paid
per common share
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
32.50
|
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
58.4
|
|
|
57.3
|
|
|
58.4
|
|
|
57.4
|
|
TRANSDIGM GROUP
INCORPORATED
|
|
|
SUPPLEMENTAL
INFORMATION - RECONCILIATION OF EBITDA,
|
|
|
EBITDA AS DEFINED
TO INCOME (LOSS) FROM CONTINUING OPERATIONS
|
|
|
FOR THE THIRTEEN
AND THIRTY-NINE WEEK PERIODS ENDED
|
|
Table
2
|
JULY 03, 2021 AND
JUNE 27, 2020
|
|
(Amounts in
millions, except per share amounts)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Thirteen Week
Periods Ended
|
|
Thirty-Nine Week
Periods Ended
|
|
|
July 3,
2021
|
|
June 27,
2020
|
|
July 3,
2021
|
|
June 27,
2020
|
Income (loss) from
continuing operations
|
|
$
|
317
|
|
|
$
|
(5)
|
|
|
$
|
473
|
|
|
$
|
552
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization expense
|
|
65
|
|
|
70
|
|
|
188
|
|
|
211
|
|
Interest expense,
net
|
|
263
|
|
|
262
|
|
|
798
|
|
|
762
|
|
Income tax (benefit)
provision
|
|
(73)
|
|
|
39
|
|
|
(45)
|
|
|
112
|
|
EBITDA
|
|
572
|
|
|
366
|
|
|
1,414
|
|
|
1,637
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Acquisition-related
expenses and adjustments (1)
|
|
6
|
|
|
3
|
|
|
24
|
|
|
19
|
|
Non-cash stock
compensation expense (2)
|
|
35
|
|
|
21
|
|
|
105
|
|
|
59
|
|
Refinancing costs
(3)
|
|
13
|
|
|
1
|
|
|
36
|
|
|
27
|
|
COVID-19 pandemic
restructuring costs (4)
|
|
1
|
|
|
30
|
|
|
40
|
|
|
30
|
|
Gain on sale of
businesses, net (5)
|
|
(68)
|
|
|
—
|
|
|
(69)
|
|
|
—
|
|
Other, net
(6)
|
|
—
|
|
|
3
|
|
|
2
|
|
|
8
|
|
Gross Adjustments to
EBITDA
|
|
(13)
|
|
|
58
|
|
|
138
|
|
|
143
|
|
EBITDA As
Defined
|
|
$
|
559
|
|
|
$
|
424
|
|
|
$
|
1,552
|
|
|
$
|
1,780
|
|
EBITDA As Defined,
Margin (7)
|
|
45.9
|
%
|
|
41.5
|
%
|
|
44.1
|
%
|
|
45.3
|
%
|
|
|
(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 (less than
$1 million and $36 million for the thirteen and thirty-nine
week periods ended July 3, 2021, respectively, and $24 million
for the thirteen and thirty-nine week periods ended June 27, 2020)
and also includes restructuring costs related to the 737 MAX
production rate change ($3 million for the thirteen and
thirty-nine week periods ended June 27, 2020). These are costs
related to the Company's actions to reduce its workforce and
consolidate certain facilities to align with customer demand. This
also includes $1 million and $4 million for the thirteen and
thirty-nine week periods ended July 3, 2021, respectively, and
$3 million for the thirteen and thirty-nine week periods ended
June 27, 2020 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).
|
|
|
(5)
|
Represents the gain
or loss on sale of businesses, which is primarily attributable to
the net gain on sale recognized as a result of the divestitures
completed during the third quarter of fiscal 2021 (TAC, ScioTeq and
TREALITY).
|
|
|
(6)
|
Primarily represents
the gain on insurance proceeds from the Leach International Europe
fire, 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.
|
|
|
(7)
|
The EBITDA As
Defined margin represents the amount of EBITDA As Defined as a
percentage of net sales.
|
TRANSDIGM GROUP
INCORPORATED
|
|
|
|
|
SUPPLEMENTAL
INFORMATION - RECONCILIATION OF
|
|
|
|
|
REPORTED EARNINGS
(LOSS) PER SHARE TO
|
|
|
|
|
ADJUSTED EARNINGS
PER SHARE
|
|
|
|
|
FOR THE THIRTEEN
AND THIRTY-NINE WEEK PERIODS ENDED
|
|
Table
3
|
JULY 03, 2021 AND
JUNE 27, 2020
|
|
(Amounts in
millions, except per share amounts)
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Thirteen Week
Periods Ended
|
|
Thirty-Nine Week
Periods Ended
|
|
|
July 3,
2021
|
|
June 27,
2020
|
|
July 3,
2021
|
|
June 27,
2020
|
Reported Earnings
(Loss) Per Share
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations
|
|
$
|
317
|
|
|
$
|
(5)
|
|
|
$
|
473
|
|
|
$
|
552
|
|
Less: Net income
attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
(1)
|
|
Net income (loss)
from continuing operations attributable to
TD Group
|
|
317
|
|
|
(5)
|
|
|
471
|
|
|
551
|
|
Less: Special
dividends declared or paid on participating
securities, including dividend equivalent payments
|
|
—
|
|
|
—
|
|
|
(73)
|
|
|
(185)
|
|
(Loss) income from
discontinued operations, net of tax
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
66
|
|
Net income (loss)
applicable to TD Group common
stockholders - basic and diluted
|
|
$
|
317
|
|
|
$
|
(6)
|
|
|
$
|
398
|
|
|
$
|
432
|
|
Weighted-average
shares outstanding under the two-class
method
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
|
55.0
|
|
|
54.1
|
|
|
54.8
|
|
|
53.9
|
|
Vested options deemed
participating securities
|
|
3.4
|
|
|
3.2
|
|
|
3.6
|
|
|
3.5
|
|
Total shares for
basic and diluted earnings (loss) per share
|
|
58.4
|
|
|
57.3
|
|
|
58.4
|
|
|
57.4
|
|
Earnings (Loss) per
share from continuing operations—basic
and diluted
|
|
$
|
5.43
|
|
|
$
|
(0.09)
|
|
|
$
|
6.83
|
|
|
$
|
6.38
|
|
(Loss) Earnings per
share from discontinued operations—basic
and diluted
|
|
—
|
|
|
(0.01)
|
|
|
—
|
|
|
1.15
|
|
Earnings (Loss) per
share
|
|
$
|
5.43
|
|
|
$
|
(0.10)
|
|
|
$
|
6.83
|
|
|
$
|
7.53
|
|
Adjusted Earnings
Per Share
|
|
|
|
|
Income (loss) from
continuing operations
|
|
$
|
317
|
|
|
$
|
(5)
|
|
|
$
|
473
|
|
|
$
|
552
|
|
Gross adjustments to
EBITDA
|
|
(13)
|
|
|
58
|
|
|
138
|
|
|
143
|
|
Purchase accounting
backlog amortization
|
|
3
|
|
|
14
|
|
|
7
|
|
|
41
|
|
Tax adjustment
(1)
|
|
(113)
|
|
|
21
|
|
|
(158)
|
|
|
(72)
|
|
Adjusted net
income
|
|
$
|
194
|
|
|
$
|
88
|
|
|
$
|
460
|
|
|
$
|
664
|
|
Adjusted diluted
earnings per share under the two-class
method
|
|
$
|
3.33
|
|
|
$
|
1.54
|
|
|
$
|
7.88
|
|
|
$
|
11.57
|
|
Diluted Earnings
(Loss) Per Share to Adjusted Earnings
Per Share
|
|
|
|
|
Diluted earnings
(loss) per share from continuing operations
|
|
$
|
5.43
|
|
|
$
|
(0.09)
|
|
|
$
|
6.83
|
|
|
$
|
6.38
|
|
Adjustments to
diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
|
Inclusion of the dividend and dividend equivalent
payments
|
|
—
|
|
|
—
|
|
|
1.24
|
|
|
3.22
|
|
Acquisition-related expenses and adjustments
|
|
0.13
|
|
|
0.24
|
|
|
0.44
|
|
|
0.82
|
|
Non-cash
stock compensation expense
|
|
0.50
|
|
|
0.31
|
|
|
1.45
|
|
|
0.80
|
|
Refinancing costs
|
|
0.18
|
|
|
0.01
|
|
|
0.50
|
|
|
0.37
|
|
Tax adjustment on
pre-tax income (1)
|
|
(1.97)
|
|
|
0.58
|
|
|
(2.22)
|
|
|
(0.56)
|
|
COVID-19
pandemic restructuring costs
|
|
0.02
|
|
|
0.43
|
|
|
0.54
|
|
|
0.42
|
|
Gain on sale of
businesses, net
|
|
(0.96)
|
|
|
—
|
|
|
(0.95)
|
|
|
—
|
|
Other,
net
|
|
—
|
|
|
0.06
|
|
|
0.05
|
|
|
0.12
|
|
Adjusted earnings per
share
|
|
$
|
3.33
|
|
|
$
|
1.54
|
|
|
$
|
7.88
|
|
|
$
|
11.57
|
|
|
|
(1)
|
For the thirteen and
thirty-nine week periods ended July 3, 2021 and June 27, 2020, 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 release of the valuation
allowance applicable to the net interest deduction limitation
carryforward and the discrete impact of excess tax benefits on
stock option exercises. Interest expense and stock compensation
expense are excluded from adjusted net income and therefore we have
excluded the impact that the release of the valuation allowance
applicable to the net interest deduction limitation carryforward
and 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
|
|
|
PROVIDED BY
OPERATING ACTIVITIES TO EBITDA,
|
|
|
EBITDA AS
DEFINED
|
|
|
FOR THE
THIRTY-NINE WEEK PERIODS ENDED
|
|
Table
4
|
JULY 03, 2021 AND
JUNE 27, 2020
|
|
(Amounts in
millions)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
Thirty-Nine Week
Periods Ended
|
|
|
July 3,
2021
|
|
June 27,
2020
|
Net cash provided by
operating activities
|
|
$
|
624
|
|
|
$
|
991
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
Changes in assets and
liabilities, net of effects from acquisitions and sales of
businesses
|
|
102
|
|
|
(166)
|
|
Interest expense, net
(1)
|
|
772
|
|
|
737
|
|
Income tax (benefit)
provision - current
|
|
(59)
|
|
|
129
|
|
Loss contract
amortization
|
|
47
|
|
|
32
|
|
Non-cash stock
compensation expense (2)
|
|
(105)
|
|
|
(59)
|
|
Refinancing costs
(3)
|
|
(36)
|
|
|
(27)
|
|
Gain on sale of
businesses, net (4)
|
|
69
|
|
|
—
|
|
EBITDA
|
|
1,414
|
|
|
1,637
|
|
Adjustments:
|
|
|
|
|
Acquisition-related
expenses and adjustments (5)
|
|
24
|
|
|
19
|
|
Non-cash stock
compensation expense (2)
|
|
105
|
|
|
59
|
|
Refinancing costs
(3)
|
|
36
|
|
|
27
|
|
COVID-19 pandemic
restructuring costs (6)
|
|
40
|
|
|
30
|
|
Gain on sale of
businesses, net (4)
|
|
(69)
|
|
|
—
|
|
Other, net
(7)
|
|
2
|
|
|
8
|
|
EBITDA As
Defined
|
|
$
|
1,552
|
|
|
$
|
1,780
|
|
|
|
(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 the gain or
loss on sale of businesses, which is primarily attributable to the
net gain on sale recognized as a result of the divestitures
completed during the third quarter of fiscal 2021 (TAC, ScioTeq and
TREALITY).
|
|
|
(5)
|
Represents accounting
adjustments to inventory associated with acquisitions of businesses
and product lines that were charged to cost of sales when 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.
|
|
|
(6)
|
Represents
restructuring costs related to the Company's cost reduction
measures in response to the COVID-19 pandemic ($36 million and
$24 million for the thirty-nine week periods ended July 3,
2021 and June 27, 2020, respectively) and also includes
restructuring costs related to the 737 MAX production rate change
($3 million for the thirty-nine week period ended June 27,
2020). These are costs related to the Company's actions to reduce
its workforce and consolidate certain facilities to align with
customer demand. This also includes $4 million and $3 million for
the thirty-nine week periods ended July 3, 2021 and June 27, 2020,
respectively, 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).
|
|
|
(7)
|
Primarily represents
the gain on insurance proceeds from the Leach International Europe
fire, 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)
|
|
|
|
|
|
|
July 3,
2021
|
|
September 30,
2020
|
Cash and cash
equivalents
|
|
$
|
4,529
|
|
|
$
|
4,717
|
|
Trade accounts
receivable - net
|
|
694
|
|
|
720
|
|
Inventories -
net
|
|
1,225
|
|
|
1,283
|
|
Current portion of
long-term debt
|
|
276
|
|
|
276
|
|
Short-term
borrowings-trade receivable securitization facility
|
|
350
|
|
|
349
|
|
Accounts
payable
|
|
206
|
|
|
218
|
|
Accrued and other
current liabilities
|
|
804
|
|
|
773
|
|
Long-term
debt
|
|
19,384
|
|
|
19,384
|
|
Total TD Group
stockholders' deficit
|
|
(3,138)
|
|
|
(3,972)
|
|
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SOURCE TransDigm Group Inc.