BREEZE-EASTERN CORP 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, December 27,
2016 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, December 27,
2016 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, December 27,
2016 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 costs
borrowings-
trade
receivable
securitization
facility,
net
of
debt
issuance 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)
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SOURCE TransDigm Group Incorporated
