TransDigm Group Reports Fiscal 2012 Third Quarter Results

CLEVELAND, Aug. 7, 2012 /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 June 30, 2012.

Highlights for the third quarter:

Net sales of $461.7 million, up 42.0% from $325.2 million;
EBITDA As Defined of $216.7 million, up 34.3% from $161.4 million;
Net income from continuing operations of $90.4 million, up 55.0% from $58.4 million;
Earnings per share of $1.68, up 58.4% from $1.06;
Adjusted earnings per share of $1.88, up 55.4% from $1.21;
Upward revision to fiscal 2012 earnings outlook.
Net sales for the quarter rose 42.0% to $461.7 million from $325.2 million in the comparable quarter a year ago. Organic net sales grew approximately 9.5%. The favorable contribution from the acquisitions of AmSafe, Schneller and Harco accounted for the balance of the sales increase.

Net income from continuing operations for the quarter rose 55.0% to $90.4 million, or $1.68 per share, compared to $58.4 million, or $1.10 per share, in the comparable quarter a year ago. The increase in net income primarily reflects the growth in net sales described above and a lower effective income tax rate. This is partially offset by higher acquisition-related and non-cash compensation costs of $10.7 million, net of tax, or $0.20 per share, and higher interest expense for the third quarter of fiscal 2012. The comparable quarter a year ago reflected acquisition-related, refinancing and non-cash compensation costs of $6.1 million, net of tax, or $0.12 per share.

Net loss from discontinued operations in the comparable quarter a year-ago was $2.1 million, or $0.04 per share.

Adjusted net income for the quarter rose 56.8% to $101.2 million, or $1.88 per share, from $64.5 million, or $1.21 per share, in the comparable quarter a year ago.

EBITDA for the quarter increased 29.9% to $203.5 million from $156.7 million for the comparable quarter a year ago. EBITDA As Defined for the period increased 34.3% to $216.7 million compared with $161.4 million in the quarter a year ago. EBITDA As Defined as a percentage of net sales for the quarter was 46.9%.

“We are pleased with the operating results of our fiscal 2012 third quarter,” stated W. Nicholas Howley, TransDigm Group’s Chairman and Chief Executive Officer. “Despite a somewhat unsettled market and economic environment, we experienced sales growth in both the commercial OEM and aftermarket, as well as the defense markets. The ongoing strong year-to-date EBITDA As Defined margin was achieved in spite of approximately 2.5 margin point dilution from acquisitions. This again demonstrates our ability to effectively integrate acquisitions and successfully implement our value based operating strategy throughout the organization.”

Year-to-Date Results

Net sales for the 39-week period ended June 30, 2012 rose 43.4% to $1,237.6 million from $863.1 million in the comparable period last year. Organic sales growth was 13.8%. The acquisitions of McKechnie, Talley, Schneller, Harco and AmSafe accounted for the balance of the sales increase.

Net income from continuing operations for the 39-week period increased 169.7% to $237.1 million, or $4.34 per share, from $87.9 million, or $1.60 per share. Net income from continuing operations in the prior year included one-time costs of $46.9 million, net of tax, or $0.88 per share, attributable to the refinancing of the Company’s capital structure in connection with the acquisition of McKechnie in the first quarter of fiscal 2011. The remainder of the increase in net income from continuing operations primarily reflects the growth in net sales and lower effective income tax rate as described above, partially offset by higher interest expense. Net income from continuing operations for the 39-week period ended June 30, 2012 includes acquisition–related and non-cash compensation costs of $29.6 million, net of tax, or $0.55 per share. In addition to the one-time costs attributable to the refinancing noted above, the net income from continuing operations in the comparable period a year ago included acquisition-related and non-cash compensation costs of $26.4 million, net of tax, or $0.49 per share.

Net income from discontinued operations in the comparable period a year ago was $16.8 million, or $0.31 per share.

Adjusted net income for the 39-week period rose 65.4% to $266.7 million, or $4.95 per share, from $161.3 million, or $3.02 per share, in the comparable period a year ago.

EBITDA for the 39-week period increased 77.4% to $559.0 million from $315.2 million in the comparable period a year ago. EBITDA As Defined for the period, increased 42.1% to $593.9 million compared with $418.0 million in the comparable period a year ago. EBITDA As Defined as a percentage of net sales for the period was 48.0%.

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 2012 Outlook

Mr. Howley continued, “The Company is revising the full year fiscal 2012 guidance to reflect the performance experienced to date and fiscal fourth quarter expectations.”

Assuming no additional acquisitions, the revised guidance is as follows:

Net sales are anticipated to be in the range of $1,683 million to $1,698 million (previously in the range of $1,670 million to $1,698 million) compared with $1,206 million in fiscal 2011;
EBITDA As Defined is anticipated to be in the range of $802 million to $810 million (previously in the range of $794 million to $806 million) compared with $590 million in fiscal 2011;
Net income is anticipated to be in the range of $319 million to $326 million (previously in the range of $298 million to $316 million) compared with $172 million in fiscal 2011;
Earnings per share are expected to be in the range of $5.87 to $5.99 per share (previously in the range of $5.47 to $5.82 per share) compared with $3.17 per share in fiscal 2011; and
Adjusted earnings per share are expected to be in the range of $6.58 to $6.70 per share (previously in the range of $6.23 to $6.57 per share) compared with $4.48 per share in fiscal 2011.