CLEVELAND, Feb. 9, 2016 /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 January 2, 2016.
Highlights for the first quarter include:
- Net sales of $701.7 million,
up 19.6% from $586.9
million;
- EBITDA As Defined of $319.4
million, up 18.4% from $269.7
million;
- Net income of $114.9 million,
up 20.3% from $95.5 million;
- Earnings per share of $1.97,
up 20.9% from $1.63;
- Adjusted earnings per share of $2.27, up 26.1% from $1.80; and
- Upward revision to fiscal 2016 financial guidance.
Net sales for the quarter rose 19.6%, or $114.8 million, to $701.7
million from $586.9 million in
the comparable quarter a year ago. The acquisitions of the Telair
Cargo Group ("Telair"), the aerospace business of Franke Aquarotter
GmbH ("Franke"), the assets of the aerospace business of Pexco LLC
("Pexco") and PneuDraulics, Inc. contributed approximately
$121.4 million of the increase in net
sales, partially offset by a slight decrease in organic net
sales.
Net income for the quarter rose 20.3% to $114.9 million, or $1.97 per share, compared to $95.5 million, or $1.63 per share, in the comparable quarter a year
ago. The increase in net income primarily reflects the growth in
net sales described above, lower effective tax rate, and strength
of our proprietary products and continued productivity
efforts. This growth in net income was partially offset by
higher interest expense, non-cash compensation and
acquisition-related costs.
Earnings per share were reduced in both 2016 and 2015 by
$0.05 and $0.06 per share respectively, representing
dividend equivalent payments during each quarter.
Adjusted net income for the quarter rose 26.5% to $128.7 million, or $2.27 per share, from $101.8 million, or $1.80 per share, in the comparable quarter a year
ago.
EBITDA for the quarter increased 15.2% to $302.2 million from $262.5
million for the comparable quarter a year ago. EBITDA
As Defined for the period increased 18.4% to $319.4 million compared with $269.7 million in the quarter a year ago.
EBITDA As Defined as a percentage of net sales for the quarter was
45.5%.
"Our fiscal 2016 first quarter revenue and EBITDA As Defined
were both up almost 20% compared to the prior year
quarter, in line with our original expectations," stated
W. Nicholas Howley, TransDigm
Group's Chairman and Chief Executive Officer. "Additionally, our
pro-forma market channel revenues, assuming we owned the same mix
of businesses in both periods, roughly met our expectations.
We saw modest increases in commercial transport OEM and
aftermarket revenues offset by declines in business jet and
helicopter revenue. Our reported EBITDA As Defined margin of
approximately 46% was about the same as the prior period in spite
of approximately 1.5 margin point dilution from the acquisitions
completed in fiscal 2015. Our constant focus on our
value-based operating strategy, including our first quarter cost
reductions, continued to show results."
During the thirteen week period ended January 2, 2016, TransDigm repurchased 323,868
shares of its common stock with a weighted-average price per share
of $218.53 at an aggregate cost of
approximately $70.8 million under our
then-existing $300 million stock
repurchase program. Subsequent to the fiscal quarter end, TransDigm
repurchased 128,319 shares of its common stock with a
weighted-average price per share of $217.47 at an aggregate cost of approximately
$27.9 million under the program. On
January 21, 2016, our Board of
Directors authorized a stock repurchase program replacing the
existing repurchase program permitting the repurchase of a portion
of TransDigm's outstanding shares not to exceed $450 million.
Subsequent to the fiscal first quarter end, on January 4, 2016, TransDigm completed the tender
offer for all of the outstanding shares of Breeze-Eastern
Corporation (Breeze-Eastern) (NYSE
MKT:BZC) for $19.61 per share
in cash. The purchase price for the tender offer was approximately
$178 million, net of approximately
$27 million of cash acquired.
Breeze-Eastern is a leading global designer and manufacturer of
high performance lifting and pulling devices for military and
civilian aircraft, including rescue hoists, winches and cargo
hooks, and weapons-lifting systems.
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 2016 Outlook
Mr. Howley continued, "We are increasing the full year fiscal
2016 guidance primarily to reflect the recent acquisition of
Breeze-Eastern, current market conditions and our first quarter
performance."
Assuming no additional acquisitions, the revised guidance is as
follows:
- Net sales are anticipated to be in the range of $3,144 million to $3,188 million compared with
$2,707 million in fiscal 2015;
- EBITDA As Defined is anticipated to be in the range of
$1,425 million to $1,445 million
compared with $1,234 million in
fiscal 2015;
- Net income is anticipated to be in the range of $539 million to $553 million compared with
$447 million in fiscal 2015;
- Earnings per share are expected to be in the range of
$9.48 to $9.72 per share based upon
weighted average shares outstanding of 56.5 million compared with
$7.84 per share in fiscal 2015;
and
- Adjusted earnings per share are expected to be in the range of
$10.65 to $10.89 per share compared
with $9.01 per share in fiscal
2015.
Earnings Conference Call
TransDigm Group will host a conference call for investors and
security analysts on February 9, 2016, beginning at
11:00 a.m., Eastern Time. To join the
call, dial (866) 515-2910 and enter the pass code 56512490.
International callers should dial (617) 399-5124 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 52839859.
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 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 2016 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; cyber-security risks 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 costs that cannot be recovered in product pricing;
risks 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
WEEK PERIODS ENDED
|
|
Table
1
|
JANUARY 2, 2016
AND DECEMBER 27, 2014
|
|
(Amounts in
thousands, except per share amounts)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
Thirteen Week
Periods Ended
|
|
|
January 2,
2016
|
|
December 27,
2014
|
NET SALES
|
|
$
|
701,695
|
|
|
$
|
586,898
|
|
COST OF
SALES
|
|
327,128
|
|
|
265,725
|
|
GROSS
PROFIT
|
|
374,567
|
|
|
321,173
|
|
SELLING AND
ADMINISTRATIVE EXPENSES
|
|
82,203
|
|
|
67,479
|
|
AMORTIZATION OF
INTANGIBLE ASSETS
|
|
16,323
|
|
|
13,026
|
|
INCOME FROM
OPERATIONS
|
|
276,041
|
|
|
240,668
|
|
INTEREST EXPENSE -
NET
|
|
111,983
|
|
|
98,935
|
|
INCOME BEFORE INCOME
TAXES
|
|
164,058
|
|
|
141,733
|
|
INCOME TAX
PROVISION
|
|
49,157
|
|
|
46,200
|
|
NET INCOME
|
|
$
|
114,901
|
|
|
$
|
95,533
|
|
NET INCOME APPLICABLE
TO COMMON STOCK
|
|
$
|
111,901
|
|
|
$
|
92,168
|
|
Net earnings per
share:
|
|
|
|
|
Basic and
diluted
|
|
$
|
1.97
|
|
|
$
|
1.63
|
|
Weighted-average
shares outstanding:
|
|
|
|
|
Basic and
diluted
|
|
56,805
|
|
|
56,591
|
|
TRANSDIGM GROUP
INCORPORATED
|
|
|
|
SUPPLEMENTAL
INFORMATION - RECONCILIATION OF EBITDA,
|
|
|
EBITDA AS DEFINED
TO NET INCOME
|
|
|
|
FOR THE THIRTEEN
WEEK PERIODS ENDED
|
|
Table
2
|
JANUARY 2, 2016
AND DECEMBER 27, 2014
|
|
(Amounts in
thousands, except per share amounts)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
Thirteen Week
Periods Ended
|
|
|
January 2,
2016
|
|
December 27,
2014
|
Net income
|
|
$
|
114,901
|
|
|
$
|
95,533
|
|
Adjustments:
|
|
|
|
|
Depreciation and
amortization expense
|
|
26,201
|
|
|
21,785
|
|
Interest expense -
net
|
|
111,983
|
|
|
98,935
|
|
Income tax
provision
|
|
49,157
|
|
|
46,200
|
|
EBITDA
|
|
302,242
|
|
|
262,453
|
|
Adjustments:
|
|
|
|
|
Acquisition-related
expenses and adjustments (1)
|
|
7,225
|
|
|
1,700
|
|
Non-cash stock
compensation expense (2)
|
|
10,681
|
|
|
5,764
|
|
Other, net
|
|
(735)
|
|
|
(189)
|
|
Gross Adjustments to
EBITDA
|
|
17,171
|
|
|
7,275
|
|
EBITDA As
Defined
|
|
$
|
319,413
|
|
|
$
|
269,728
|
|
EBITDA As Defined,
Margin (3)
|
|
45.5
|
%
|
|
46.0
|
%
|
(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) 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
WEEK PERIODS ENDED
|
|
Table
3
|
JANUARY 2, 2016
AND DECEMBER 27, 2014
|
|
(Amounts in
thousands, except per share amounts)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
Thirteen Week
Periods Ended
|
|
|
January 2,
2016
|
|
December 27,
2014
|
Reported Earnings
Per Share
|
|
|
|
|
Net income
|
|
$
|
114,901
|
|
|
$
|
95,533
|
|
Less: dividends on
participating securities
|
|
(3,000)
|
|
|
(3,365)
|
|
Net income applicable
to common stock - basic and diluted
|
|
$
|
111,901
|
|
|
$
|
92,168
|
|
Weighted-average
shares outstanding under the two-class method
|
|
|
|
|
Weighted-average
common shares outstanding
|
|
53,706
|
|
|
52,511
|
|
Vested options deemed
participating securities
|
|
3,099
|
|
|
4,080
|
|
Total shares for
basic and diluted earnings per share
|
|
56,805
|
|
|
56,591
|
|
Basic and diluted
earnings per share
|
|
$
|
1.97
|
|
|
$
|
1.63
|
|
Adjusted Earnings
Per Share
|
|
|
Net income
|
|
$
|
114,901
|
|
|
$
|
95,533
|
|
Gross adjustments to
EBITDA
|
|
17,171
|
|
|
7,275
|
|
Purchase accounting
backlog amortization
|
|
2,540
|
|
|
1,966
|
|
Tax
adjustment
|
|
(5,906)
|
|
|
(3,012)
|
|
Adjusted net
income
|
|
$
|
128,706
|
|
|
$
|
101,762
|
|
Adjusted diluted
earnings per share under the two-class method
|
|
$
|
2.27
|
|
|
$
|
1.80
|
|
Diluted Earnings
Per Share to Adjusted Earnings Per Share
|
|
|
Diluted earnings per
share
|
|
$
|
1.97
|
|
|
$
|
1.63
|
|
Adjustments to
diluted earnings per share:
|
|
|
|
|
Inclusion of the dividend equivalent payments
|
|
0.05
|
|
|
0.06
|
|
Non-cash
stock compensation expense
|
|
0.13
|
|
|
0.07
|
|
Acquisition-related expenses
|
|
0.12
|
|
|
0.04
|
|
Adjusted earnings per
share
|
|
$
|
2.27
|
|
|
$
|
1.80
|
|
TRANSDIGM GROUP
INCORPORATED
|
|
|
|
|
SUPPLEMENTAL
INFORMATION - RECONCILIATION OF NET CASH
|
|
Table
4
|
PROVIDED BY
OPERATING ACTIVITIES TO EBITDA,
|
|
EBITDA AS
DEFINED
|
|
FOR THE THIRTEEN
WEEK PERIODS ENDED
|
|
JANUARY 2, 2016
AND DECEMBER 27, 2014
|
|
|
|
(Amounts in
thousands)
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
Thirteen Week
Periods Ended
|
|
|
January 2,
2016
|
|
December 27,
2014
|
Net cash provided by
operating activities
|
|
$
|
164,130
|
|
|
$
|
188,959
|
|
Adjustments:
|
|
|
|
|
Changes in assets and
liabilities, net of effects from acquisitions of
businesses
|
|
(22,453)
|
|
|
(69,219)
|
|
Interest expense -
net (1)
|
|
108,151
|
|
|
94,936
|
|
Income tax provision
- current
|
|
48,556
|
|
|
45,277
|
|
Non-cash equity
compensation (2)
|
|
(10,681)
|
|
|
(5,764)
|
|
Excess tax benefit
from exercise of stock options
|
|
14,539
|
|
|
8,264
|
|
EBITDA
|
|
302,242
|
|
|
262,453
|
|
Adjustments:
|
|
|
|
|
Acquisition-related
expenses (3)
|
|
7,225
|
|
|
1,700
|
|
Non-cash stock
compensation expense (2)
|
|
10,681
|
|
|
5,764
|
|
Other, net
|
|
(735)
|
|
|
(189)
|
|
EBITDA As
Defined
|
|
$
|
319,413
|
|
|
$
|
269,728
|
|
(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.
|
|
TRANSDIGM GROUP
INCORPORATED
|
|
|
|
SUPPLEMENTAL
INFORMATION - BALANCE SHEET DATA
|
|
Table
5
|
(Amounts in
thousands)
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
January 2,
2016
|
|
September 30,
2015
|
Cash and cash
equivalents
|
|
805,291
|
|
|
714,033
|
|
Trade accounts
receivable - net
|
|
427,265
|
|
|
444,072
|
|
Inventories -
net
|
|
599,311
|
|
|
591,401
|
|
Current portion of
long-term debt, net of debt issuance costs
|
|
43,445
|
|
|
43,427
|
|
Short-term
borrowings-trade receivable securitization facility, net of debt
issuance costs
|
|
199,817
|
|
|
199,792
|
|
Accounts
payable
|
|
113,607
|
|
|
142,822
|
|
Accrued current
liabilities
|
|
299,573
|
|
|
271,553
|
|
Long-term debt, net
of debt issuance costs
|
|
8,099,159
|
|
|
8,106,383
|
|
Total stockholders'
deficit
|
|
(964,270)
|
|
|
(1,038,306)
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/transdigm-group-reports-fiscal-2016-first-quarter-results-300216899.html
SOURCE TransDigm Group Incorporated