TransDigm Group Reports Fiscal 2013 First Quarter Results

          TransDigm Group Reports Fiscal 2013 First Quarter Results

PR Newswire

CLEVELAND, Feb. 4, 2013

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:

  oNet sales of $430.4 million, up 22.1% from $352.5 million;
  oEBITDA As Defined of $200.9 million, up 15.4% from $174.1 million;
  oNet income of $74.2 million, up 13.9% from $65.1 million;
  oEarnings per share of $0.66, down 42.6% from $1.15; and
  oAdjusted 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, weare 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:

  oNet 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;
  oEBITDA 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;
  oNet 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;
  oEarnings 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
  oAdjusted 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:

  oneither EBITDA nor EBITDA As Defined reflects the significant interest
    expense, or the cash requirements necessary to service interest payments,
    on our indebtedness;
  oalthough 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;
  othe omission of the substantial amortization expense associated with our
    intangible assets further limits the usefulness of EBITDA and EBITDA As
    Defined;
  oneither EBITDA nor EBITDA As Defined includes the payment of taxes, which
    is a necessary element of our operations; and
  oEBITDA 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
DECEMBER 29, 2012 AND DECEMBER 31, 2011             Table 1
(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   55,161                 41,850
EXPENSES
AMORTIZATION OF INTANGIBLE   10,540                 12,439
ASSETS
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                                       65,105
                             74,170
NET INCOME APPLICABLE TO     $            $            
COMMON STOCK                                     61,806
                             36,040
Net earnings per share:
                             $            $            
 Basic and diluted                              1.15
                             0.66
 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,         December 31,
                                     2012                 2011
                                     $            $        
Net income                                               
                                     74,170              65,105
Adjustments:
Depreciation and amortization        17,452               17,782
expense
Interest expense, net                62,876               49,061
Income tax provision                 35,800               31,100
EBITDA                               190,298              163,048
Adjustments:
Acquisition related expenses         3,467                7,452
and adjustments ^(1)
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            46.7%                49.4%
^(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 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
REPORTED EARNINGS PER SHARE TO                           Table 3
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,           December 31,
                                   2012                   2011
                                   $            $         
Net income                                74,170         
                                                          65,105
Less: dividends paid on            (38,130)               (3,299)
participating securities
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     51,796                 50,431
outstanding
Vested options deemed              2,657                  3,451
participating securities
Total shares for basic and         54,453                 53,882
diluted earnings per share
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        1,461                  5,687
amortization
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
DILUTED EARNINGS PER SHARE TO                               Table 4
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             (38,130)               (3,299)
participating securities
Net income applicable to common      $            $        
stock - basic and diluted                   36,040          
                                                            61,806
Weighted average common shares       51,796                 50,431
outstanding
Vested options deemed participating  2,657                  3,451
securities
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         0.70                   0.06
equivalent payment
 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
PROVIDED BY OPERATING ACTIVITIES TO EBITDA, EBITDA AS DEFINED  Table 5
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,             December 31,

                                     2012                     2011
Net Cash Provided by Operating       $                  $      
Activities                           98,115                    68,094
Adjustments:
Changes in assets and
liabilities, net of effects          (20,996)                  7,307
from acquisitions of
businesses
Interest expense - net ^(1)          59,080                    46,445
Income tax provision - current       34,542                    35,800
Non-cash equity compensation         (7,131)                   (3,648)
^(2)
Excess tax benefit from              26,688                    9,050
exercise of stock options
EBITDA                               190,298                   163,048
Adjustments:
Acquisition related                  3,467                     7,452
expenses^(3)
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 -     218,660                 235,783
Net
Inventories - Net               332,468                 320,503
Current portion of long-term    22,000                  20,500
debt
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

Website: http://www.transdigm.com
 
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