CLEVELAND,
Feb. 3 /PRNewswire-FirstCall/ -- TransDigm Group Incorporated
(NYSE: TDG), a leading global designer, producer and supplier of highly
engineered aircraft components, today reported results for the fiscal first
quarter ended
December 27, 2008. Highlights for the first quarter include:
-- Earnings per share up 44.4% to $0.78 from $0.54
-- Net sales up 11.1% to $181.3 million from $163.1 million
-- Net income up 46.8% to $39.6 million from $27.0 million
-- Adjusted earnings per share up 41.4% to $0.82 from $0.58
-- EBITDA As Defined up 20.6% to $91.5 million from $75.9 million
-- Fiscal 2009 financial guidance raised
Net sales for the quarter rose 11.1% to $181.3 million from $163.1 million
in the comparable quarter a year ago. Organic net sales growth was
approximately 3%. The acquisitions of CEF Industries, Unison Industries
ignition product line and Aircraft Parts Corporation ("APC") accounted for the
balance of the sales increase.
Net income for the quarter rose 46.8% to $39.6 million, or $0.78 per
share, compared with $27.0 million, or $0.54 per share, in the comparable
quarter a year ago. This increase in net income of $12.6 million reflects the
net sales growth, improvements in operating margins resulting from the
strength of our proprietary products, productivity gains from the cost
reduction initiatives implemented during the prior quarter, and a favorable
product sales mix. Additionally, a decrease in interest expense, reduced
research and development costs and a lower effective tax rate contributed to
the increase in net income.
Adjusted net income for the quarter increased 41.6% to $41.3 million, or
$0.82 per share, from $29.1 million, or $0.58 per share, in the comparable
quarter a year ago. Adjusted net income for the current quarter excludes $1.7
million, net of tax, or $0.04 per share, of non-cash compensation costs and
acquisition-related expenses. Adjusted net income for the prior-year quarter
excluded $2.1 million, net of tax, or $0.04 per share, of non-cash
compensation costs and acquisition-related expenses.
EBITDA for the quarter increased 22.1% to $89.6 million from $73.4 million
for the comparable quarter a year ago. EBITDA As Defined for the quarter also
increased 20.6% to $91.5 million from $75.9 million for the comparable quarter
a year ago. EBITDA As Defined as a percentage of net sales for the quarter
was 50.5%.
"Despite the difficult global economic climate, we are very pleased with
the start to our 2009 fiscal year," stated W. Nicholas Howley, TransDigm
Group's Chairman and Chief Executive Officer. "In particular, our positive
first quarter results reflect strong defense sales which offset modestly lower
commercial aftermarket sales versus the prior year quarter as well as the
negative impact of the Boeing strike. Our EBITDA As Defined margin improved
to our highest quarterly reported level of 50.5% as a result of both a
favorable sales mix and a consistent focus on our value-based operating
strategy."
During the quarter, the Company purchased 383,600 shares of the Company's
common stock on the open market for approximately $11.8 million. At December
27, 2008, the Company had remaining authorization to purchase $38.2 million of
additional shares.
As previously disclosed, TransDigm Group acquired the aerospace component
supplier APC on December 16, 2008.
Fiscal 2009 Outlook
Mr. Howley concluded, "We are increasing our annual financial guidance to
reflect our first quarter results, the acquisition of APC, and a more
favorable tax and interest expense outlook, while keeping in mind our
continuing concern regarding the uncertain worldwide economic and aerospace
market conditions."
The Company is raising full year fiscal 2009 guidance, which assumes no
additional acquisitions, as follows:
-- Revenues are anticipated in the range of $758 million to $783 million
(previously in the range of $740 million to $770 million) compared with $714
million in fiscal 2008;
-- Net income is anticipated in the range of $149 million to $158 million
(previously in the range of $140 million to $150 million) compared with $133
million in fiscal 2008;
-- EBITDA As Defined is anticipated in the range of $359 million to $372
million (previously in the range of $348 million to $365 million) compared
with $333 million in fiscal 2008;
-- Earnings per share are expected to be in the range of $2.96 to $3.13
per share (previously in the range of $2.73 to $2.93 per share) compared with
$2.65 in fiscal 2008. Weighted-average shares outstanding are assumed to be
50.4 million, a decrease from the previous assumption of 51.2 million due to
the share repurchase program as well as a reduction in anticipated stock
option exercises; and
-- Adjusted earnings per share are expected to be in the range of $3.14 to
$3.31 per share (previously in the range of $2.90 to $3.10 per share) compared
with $2.79 in fiscal 2008.
Please see the attached tables for a reconciliation of net income to
EBITDA, EBITDA As Defined, and adjusted net income for the periods discussed
in this press release.
Conference Call
TransDigm Group will host a conference call for investors and security
analysts on February 3, 2009, beginning at 11:00 a.m., Eastern Time. To join
the call, dial (800) 261-3417 and enter the pass code 68367710. International
callers should dial (617) 614-3673 and use the same pass code. A live audio
webcast can be accessed online at http://www.transdigm.com. 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 80573106. 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/
electromechanical actuators and controls, ignition systems and components,
gear pumps, specialized valves, engineered connectors, power conditioning
devices, specialized fluorescent lighting and AC/DC electric motors, aircraft
audio systems, engineered latches and cockpit security devices, lavatory
hardware and components, hold open rods and locking devices, specialized
cockpit displays, elastomers, NiCad batteries/chargers, and starter generators
and related components.
Non-GAAP Supplemental Information
EBITDA, EBITDA As Defined, 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 acquisition-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, acquisition-related costs
and non-cash charges incurred in connection with certain employee benefit
plans. For more information regarding the computation of EBITDA, EBITDA As
Defined and adjusted net income, please see the attached financial tables.
TransDigm Group presents these non-GAAP financial measures because it
believes that they are a useful indicator 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 a company's operating performance without regard to items such as
interest expense, income tax expense and depreciation and amortization, which
can vary substantially from company to company. 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 and management team in
connection with employee incentive programs and the preparation of its annual
budget and financial projections. In addition, TransDigm Group's management
and our investors use 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, 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, 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.
Forward-Looking Statements
Statements in this press release that are not historical facts are
forward-looking statements under the provisions of the Private Securities
Litigation Reform Act of 1995, including expectations of future performance,
profitability, growth and earnings. All statements other than statements of
historical fact that address activities, events or developments that we
expect, believe or anticipate will or may occur in the future are forward-
looking statements, including, in particular, statements about our plans,
objectives, strategies and prospects regarding, among other things, our
financial condition, results of operations, and business. We have identified
some of these forward-looking statements with words like "believe," "may,"
"will," "should," "expect," "intend," "plan," "predict," "anticipate,"
"estimate," or "continue" and other words and terms of similar meaning.
Specifically, statements contained under the heading "Fiscal 2009 Outlook"
constitute 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 in any forward-looking statements made
by, or on behalf of, TransDigm Group. These risks and uncertainties include
but are not limited to: a decrease in flight hours and our customers'
profitability, both of which are impacted by general economic conditions;
future terrorist attacks; our substantial indebtedness; our reliance on
certain customers; our fixed price contracts; the U.S. defense budget and
risks associated with being a government supplier; failure to maintain
government or industry approvals; the pricing review to which certain of our
divisions and subsidiaries have been subject; failure to complete or
successfully integrate acquisitions; future sales of common stock in the
market caused by the substantial amount of stock held by affiliates; 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 any 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.
TRANSDIGM GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THIRTEEN WEEK PERIODS ENDED
DECEMBER 27, 2008 AND DECEMBER 29, 2007
(Amounts in thousands, except per share amounts)
(Unaudited)
Thirteen Week Periods Ended
December 27, 2008 December 29, 2007
NET SALES $181,276 $163,136
COST OF SALES 76,988 75,044
GROSS PROFIT 104,288 88,092
OPERATING EXPENSES:
Selling and administrative 18,176 17,872
Amortization of intangibles 3,224 3,311
Total operating expenses 21,400 21,183
INCOME FROM OPERATIONS 82,888 66,909
INTEREST EXPENSE - Net 21,982 24,507
INCOME BEFORE INCOME TAXES 60,906 42,402
INCOME TAX PROVISION 21,307 15,434
NET INCOME $39,599 $26,968
Net Earnings Per Share:
Basic $0.81 $0.57
Diluted $0.78 $0.54
Weighted-Average Shares Outstanding:
Basic 48,603 47,223
Diluted 50,537 49,862
TRANSDIGM GROUP INCORPORATED
SUPPLEMENTAL INFORMATION
FOR THE THIRTEEN WEEK PERIODS ENDED
DECEMBER 27, 2008 AND DECEMBER 29, 2007
(Amounts in thousands)
(Unaudited)
Thirteen Week Periods Ended
December 27, 2008 December 29, 2007
Net Income $39,599 $26,968
Depreciation and Amortization 6,713 6,493
Interest Expense, net 21,982 24,507
Income Tax Provision 21,307 15,434
EBITDA 89,601 73,402
Add: As Defined Adjustments:
Deferred Compensation Costs (1) 299 520
Stock Option Expense (2) 795 1,206
Acquisition-Related Costs (3) 817 727
Gross Adjustments to EBITDA 1,911 2,453
EBITDA As Defined $91,512 $75,855
EBITDA As Defined, Margin (4) 50.5% 46.5%
(1) Represents the expenses recognized by TransDigm Group under its
deferred compensation plans.
(2) Represents the non-cash compensation expense recognized by TransDigm
Group under its stock plans.
(3) Represents costs incurred to integrate acquired businesses into
TransDigm Group's operations and purchase accounting adjustments to
inventory that were charged to cost of sales when the inventory was
sold.
(4) The EBITDA As Defined margin represents the amount of EBITDA As
Defined as a percentage of net sales.
TRANSDIGM GROUP INCORPORATED
SUPPLEMENTAL INFORMATION
FOR THE THIRTEEN WEEK PERIODS ENDED
DECEMBER 27, 2008 AND DECEMBER 29, 2007
(Amounts in thousands, except per share amounts)
(Unaudited)
Thirteen Week Periods Ended
December 27, 2008 December 29, 2007
Net Income $39,599 $26,968
Gross Adjustments to EBITDA 1,911 2,453
Purchase Accounting Backlog Amortization 652 954
Tax Adjustment (897) (1,240)
Adjusted Net Income $41,265 $29,135
Basic Earnings per Share $0.81 $0.57
Diluted Earnings per Share $0.78 $0.54
Adjusted Basic Earnings per Share $0.85 $0.62
Adjusted Diluted Earnings per Share $0.82 $0.58
Weighted-Average Shares Outstanding:
Basic 48,603 47,223
Diluted 50,537 49,862
TRANSDIGM GROUP INCORPORATED
SELECTED BALANCE SHEET DATA
(Amounts in thousands)
(Unaudited)
December 27, September 30,
2008 2008
Cash and cash equivalents $149,309 $159,062
Trade accounts receivable - Net 103,128 96,196
Inventories 154,536 144,114
Accounts payable 26,067 25,140
Accrued liabilities 93,290 63,362
Long-Term Debt 1,357,113 1,357,230
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