TransDigm Group Reports Fiscal 2014 First Quarter Results

CLEVELAND, Feb. 4, 2014 /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 28, 2013.

Highlights for the first quarter include:
Net sales of $529.3 million, up 23.0% from $430.4 million;
EBITDA As Defined of $243.6 million, up 21.2% from $200.9 million;
Net income of $86.1 million, up 16.1% from $74.2 million;
Earnings per share of $1.44, up 118.2% from $0.66;
Adjusted earnings per share of $1.66, up 9.9% from $1.51; and
Upward revision to fiscal 2014 financial guidance.

Net sales for the quarter rose 23.0% to $529.3 million from $430.4 million in the comparable quarter a year ago. Organic net sales grew approximately 9.1%. The favorable contribution from the acquisitions of Aerosonic, Arkwin and Whippany Actuation accounted for the balance of the increase in net sales.

Net income for the quarter rose 16.1% to $86.1 million, or $1.44 per share, compared to $74.2 million, or $0.66 per share, in the comparable quarter a year ago. Earnings per share were reduced by $0.07 per share representing dividend equivalent payments made in the quarter compared to $0.70 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 $4.2 billion to $5.7 billion primarily to fund the $22.00 per share dividend paid in July 2013.

Adjusted net income for the quarter rose 15.2% to $94.8 million, or $1.66 per share, from $82.3 million, or $1.51 per share, in the comparable quarter a year ago. Adjusted earnings per share increase of 9.9% was lower than the increase in adjusted net income of 15.2% as a result of higher weighted average shares of 57.0 million, up from 54.5 million in the prior year period.

EBITDA for the quarter increased 23.2% to $234.5 million from $190.3 million for the comparable quarter a year ago. EBITDA As Defined for the period increased 21.2% to $243.6 million compared with $200.9 million in the quarter a year ago. EBITDA As Defined as a percentage of net sales for the quarter was 46.0%.

“We are pleased with our operating results for the first quarter of fiscal year 2014,” stated W. Nicholas Howley, TransDigm Group’s Chairman and Chief Executive Officer. "We experienced revenue growth in all aerospace markets, and we see continuing signs of an improving commercial aftermarket as commercial aftermarket sales rose both sequentially and versus the prior year. Adjusting for acquisition dilution of approximately two margin points from the acquisitions completed in fiscal 2013, our core EBITDA As Defined margin was strong at 48%.

As previously reported on December 19, 2013, TransDigm Group acquired Airborne Systems for approximately $250 million in cash. Airborne Systems is the industry leading designer and manufacturer of military personnel parachutes, cargo aerial delivery systems, emergency escape systems, naval decoys and other related products for the defense industry.

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 2014 Outlook
Mr. Howley continued, “We are increasing the full year fiscal 2014 guidance primarily to reflect the recent acquisition of Airborne Systems and our first quarter performance.”

The Company is adjusting full year fiscal 2014 guidance, which assumes no additional acquisitions, as follows:
Net sales are anticipated to be in the range of $2,283 million to $2,343 million (previously in the range of $2,155 million to $2,215 million) compared with $1,924 million in fiscal 2013;
EBITDA As Defined is anticipated to be in the range of $1,036 million to $1,064 million (previously in the range of $1,004 million to $1,032 million) compared with $900 million in fiscal 2013;
Net income is anticipated to be in the range of $375 million to $393 million (previously in the range of $372 million to $390 million) compared with $303 million in fiscal 2013;
Earnings per share are expected to be in the range of $6.24 to $6.54 per share (previously in the range of $6.16 to $6.48 per share) compared with $2.39 per share in fiscal 2013; and
Adjusted earnings per share are expected to be in the range of $7.35 to $7.65 per share (previously in the range of $7.00 to $7.32 per share) compared with $6.90 per share in fiscal 2013.