Transdigm Group Inc. · NYSE:TDG
Transdigm — Debt Investor Presentation (January 2012)
44 slides from Transdigm's debt investor presentation, Jan 30, 2012
Slide 1: $500,000,000 First Lien Term Loan Presentation to Public Lenders
$500,000,000 First Lien Term Loan Presentation to Public Lenders January 30, 2012 Exhibit 99.1
Slide 2: Safe Harbor Statement
1 Safe Harbor Statement This presentation contains forward-looking statements that involve substantial risks and uncertainties. You can identify forward-looking statements by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “should,” “will,” “would” or s
Slide 3: Safe Harbor Statement (cont'd)
2 Safe Harbor Statement (cont’d) These events 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; ou
Slide 4: Definitions
3 Definitions EBITDA – Earnings before interest, income taxes, depreciation and amortization. TransDigm EBITDA As Defined – excludes inventory purchase adjustments, non-cash compensation and deferred compensation charges, acquisition integration costs, refinancing costs and one-time IPO related cost
Slide 5: Special Notice Regarding Pro Forma and Non-GAAP Information
4 Special Notice Regarding Pro Forma and Non-GAAP Information This presentation sets forth certain pro forma financial information. This pro forma financial information gives effect to certain recently completed acquisitions and divestitures. Such pro forma information is based on certain assumption
Slide 6: Agenda
5 Transaction Overview Credit Suisse Hayes Smith, Managing Director TransDigm & AmSafe Overview TransDigm Nick Howley, Chief Executive Officer Key Credit Considerations TransDigm Nick Howley, Chief Executive Officer Pro Forma Financial Overview TransDigm Greg Rufus, Chief Financial Officer TransDigm
Slide 7: TransDigm & AmSafe Overview
INNOVATIVE AEROSPAGE SOLUTIONS:
Slide 8: Executive Summary
7 Executive Summary TransDigm Inc., a subsidiary of TransDigm Group Incorporated (NYSE: TDG) (“TransDigm” or the “Company”), intends to raise $500 million in financing to support its acquisition of AmSafe Global Holdings, Inc. (“AmSafe” or the “Target”). The new financing will consist of a $500 mill
Slide 9: Sources & Uses and Pro Forma Capitalization
8 Sources Uses Actual Cum. EBITDA Combined Cum. EBITDA % of Debt 9/30/11 multiple FY11 multiple Capitalization Maturity Sources & Uses and Pro Forma Capitalization Revolver (1) $0.0 Equity consideration $750.0 Excess cash 265.0 Transaction fees 15.0 New First Lien Term Loan 500.0 Total sources $765.
Slide 10: Business Overview
INNOVATIVE AEROSPAGE SOLUTIONS:
Slide 11: Business Overview
DISTINGUISHING CHARACTERISTICS Business FY11 10 Highly engineered aerospace components Proprietary and sole source products Significant aftermarket content High free cash flow conversion ($ in millions) Business Overview (1) attributable to recent acquisitions of McKechnie (less divestitures of the
Slide 12: Diverse Products, Platforms and Markets
11 Diverse Products, Platforms and Markets
Slide 13: AmSafe – Diverse Products, Platforms and Markets
12 Aviation Military Ground Transportation AmSafe – Diverse Products, Platforms and Markets FY11 Revenue: $177 million FY11 EBITDA: $53 million Products include: Traditional seatbelts Seatbelt airbags Cargo handling products / nets ~95% world market share in commercial transport seat belts FY11 Reve
Slide 14: TransDigm & AmSafe – Significant Expansion Of Our Global Footprint
13 TransDigm & AmSafe – Significant Expansion Of Our Global Footprint
Slide 15: Key Credit Considerations
INNOVATIVE AEROSPAGE SOLUTIONS:
Slide 16: Key Credit Considerations
15 MULTIPLE GROWTH PATHS PROVEN OPERATING STRATEGY ATTRACTIVE MARKET POSITION Consistent Cash Generation and Long-Term Performance Key Credit Considerations Experienced management team Demonstrated value generation Proven acquisition / integration Market growth High margins Acquisitions Low Capex St
Slide 17: Steady Growth in Passenger Traffic Drives Stable Aftermarket Sales
16 Steady Growth in Passenger Traffic Drives Stable Aftermarkets Sales…
Slide 18: With OEM Production Rebounding…
17 17 1,000 1,200 1,400 '96 '98 '00 '02 '04 '06 '08 '12E '14E COMMERCIAL TRANSPORTS Source: Wall Street Research / Airline Monitor / Management estimates as of October 2011. REGIONAL & BUSINESS JETS (units delivered) (units delivered) With OEM Production Rebounding… 1,000 1,250 1,500 '96 '98 '00 '02
Slide 19: Outlook for Military Spending
18 18 $0 $50 $100 $150 $200 $250 $300 '10 '11 '12 '13 '14 '15 '16 O&M Base + Supplemental Budget (Nominal Dollars) ($ in billions) Source: Department of Defense, Wall Street research and Management estimates as of November 2011. O&M Base Budget (Nominal Dollars) U.S. Department of Defense Outlook fo
Slide 20: Strong Market Positions – TDG & AmSafe
19 19 Selection / Qualification Process FAA Certification Niche Markets Risk / Reward Trade-Off Strong Market Positions – TDG & AmSafe
Slide 21: TransDigm and AmSafe – Strong Focus on High-Margin Aftermarket
20 Aftermarket ~56% OEM ~44% Aftermarket ~85% OEM ~15% TransDigm NET SALES AmSafe NET SALES (excl. Ground Transportation) TransDigm: Based on management estimates for the fiscal year ended 9/30/11. AmSafe: Based on TransDigm management estimates for the fiscal year ended 12/31/11 (Excluding Ground T
Slide 22: Combined Strong Focus on High-Margin Aftermarket
21 Aftermarket ~60% OEM ~40% Comm Aftmkt 46% Def Aftmkt 14% Def OEM 11% Comm OEM 29% Approximately 60% of combined pro forma net sales and a much higher percentage of combined EBITDA As Defined are from the stable, high-margin aftermarket. Combined NET SALES (excl. Ground Transportation) Combined EB
Slide 23: Significant Proprietary and Sole Source Revenue Base
22 Non Sole Source 25% Sole Source 75% ~ ~ We believe AmSafe’s proprietary and sole source revenue base (excl. Ground Transportation) is similar to TransDigm. TransDigm PROPRIETARY SALES Based on management estimates of pro forma TDG sales for the fiscal year ended 9/30/11. TransDigm SOLE SOURCE SAL
Slide 24: Proven Operating Strategy
23 Proven Operating Strategy 3 VALUE DRIVERS Profitable new business Productivity and cost improvement Value-based pricing
Slide 25: Proven Record of Acquisition & Integration
24 1993 – 2001 2002 – 2006 2006 – 2009 Adel Aeroproducts Wiggins Controlex Marathon Adams Rite Aerospace Christie Champion Honeywell Lube Pump Fuelcom Norco Avionic Instruments Skurka Fluid Regulators Eaton Motors Dukes Semco Hartwell Electromech Tyee TAC Linread (1) Valley-Todeco (1) AQS (1) Talley
Slide 26: Pro Forma Financial Overview
Pro Forma Financial Overview
Slide 27: Consistent Historical Growth and Performance
26 Consistent Historical Growth and Performance (1) Based on TransDigm’s pro forma 9/30/11 revenue, including revenue attributable to recent acquisitions of McKechnie (less divestitures of the fasteners business and AQS), Talley Actuation, Schneller and Harco prior to the date of acquisition, of $1,
Slide 28: Proven Ability to Realize Value
Adams Rite Schneller TransDigm has been very successful in realizing EBITDA growth in each of its acquisitions. Norco 27 Proven Ability to Realize Value 2011 Price Productivity Volume Target Year 0 Price Productivity Volume Year 6 Year 0 Price Productivity Volume Year 2 Source: Company materials.
Slide 29: TransDigm & AmSafe – Combined FY11
Combined financial metrics continue to be very attractive. Pro Forma Revenue (1) Pro Forma EBITDA (2) Pro Forma EBITDA Margin 28 TransDigm & AmSafe – Combined FY11 ($ in millions) TransDigm 84% Amsafe 16% 23.3% 43.4% 47.2% TransDigm Amsafe Combined Amsafe 9% TransDigm 91% (1) Based on TransDigm’s pr
Slide 30: Pro forma Company will generate significant free cash flow
The Pro forma Company will generate significant free cash flow. FY11 Pro forma Combined 29 ($ in millions) Free Cash Flow EBITDA $705.0 Capital Expenditures (20.6) Cash Interest Expense (207.8) Cash Taxes (94.4) Free Cash Flow Before WC $382.2 % of EBITDA 54.2% (1) (1) Based on TransDigm’s pro forma
Slide 31: TransDigm Financial Overview
TransDigm Financial Overview
Slide 32: Consistent Track Record of Financial Success
TransDigm’s sales have grown every year since its founding. 31 Consistent Track Record of Financial Success
Slide 33: Slide 33
Slide 34: TransDigm Free Cash Flow
TransDigm generates significant free cash flow. 33 Fiscal Year Ending September 30, 2007 2008 2009 2010 2011 TransDigm Free Cash Flow ($ in millions) EBITDA $274.7 $333.1 $374.7 $411.6 $589.9 CapEx (10.3) (10.9) (13.2) ($12.9) ($18.0) Cash Interest Expense (90.7) (95.1) (82.2) ($97.7) ($155.8) Cash
Slide 35: TransDigm Deleveraging Profile
34 TransDigm Deleveraging Profile (Total Debt / EBITDA as Defined) 2.0x 2.5x 3.0x 3.5x 4.0x 4.5x 5.0x 5.5x 6.0x 6.5x FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 PF FY11 (1) (1) Total Debt (Including new $500 million term loan) ÷ Combined Pro forma EBITDA as Defined (TDG + AmSafe). Pr
Slide 36: NPV Cash Benefit of Tax Savings
Realized Realized Total First 2 years Years 3-10 35 Net Operating Loss Carryforward $11.1 $11.1 - Redemption of Stock Options on Sale $11.6 $11.6 - Amortizable Tax Intangible Assets (338 (h) (10) election) $50.9 $13.0 $37.9 NPV Current Estimate $73.6 $35.7 $37.9 ($ in millions) NPV Cash Benefit of T
Slide 37: EBITDA As Defined Reconciliation
36 Fiscal year ended September 30, PF (1) 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2011 EBITDA As Defined Reconciliation ($ in millions) (1) Pro forma EBITDA As Defined includes TransDigm’s EBITDA as Defined plus EBITDA attributable to recent acquisit
Slide 38: AmSafe Financial Overview
INNOVATIVE AEROSPAGE SOLUTIONS:
Slide 39: AmSafe Financial Highlights
Fiscal Year Ended December 31, 2008 2009 2010 2011 38 AmSafe Financial Highlights ($ in millions) Source: Company materials. Net sales $207.4 $176.3 $212.6 $260.0 EBITDA $41.1 $41.8 $46.4 $60.5 As % of Sales 19.8% 23.7% 21.8% 23.3% Capital expenditures (1.5) (3.1) (3.9) (2.6) EBITDA - CapEx $39.6 $3
Slide 40: AmSafe EBITDA Reconciliation
Fiscal Year Ended December 31, 2008 2009 2010 2011 39 AmSafe EBITDA Reconciliation ($ in millions) Source: Company materials. Net Income (loss) ($29.5) ($25.9) ($30.5) ($3.7) Add: Loss (income) from discontinued operations (2.0) (0.9) 2.8 2.6 Interest expense, net 29.1 27.1 28.5 30.0 Provision for i
Slide 41: Syndication Overview & Timetable
Syndication Overview & Timetable
Slide 42: Preliminary Transaction Timeline
Su Mo Tu We Th Fr Sa Su Mo Tu We Th Fr Sa Week of Event 41 January 2012 February 2012 Holiday Key date January 23 Rating Agencies Meetings (Jan 24) January 30 Bank meeting conference call (Jan 30) February 6 TransDigm Q1 earnings release (Feb 7) Lender commitments due (Feb 8) February 13 Allocation
Slide 43: Summary Terms
42 Summary Terms Borrower: TransDigm, Inc (the "Company" or the "Borrower", and together with TransDigm Group Incorporated (“Holdings”) and certain of the Company’s subsidiaries, the "Credit Group"). Lead Arranger, Bookrunner & Administrative Agent: Credit Suisse ("CS", the "Lead Arranger" and "Admi
Slide 44: INNOVATIVE AEROSPAGE SOLUTIONS:
INNOVATIVE AEROSPAGE SOLUTIONS:
TransDigm Group — Debt Investor Presentation (January 2012) on 6ix