Slide 1: FY 2018 First Quarter Earnings Conference Call
FY 2018 First Quarter Earnings Conference Call February 6, 2018
Slide 2: Agenda
Agenda TransDigm Overview, W. Nicholas Howley Highlights and Outlook Chairman and CEO Operating Performance Kevin Stein and Market Review President and COO Financial Results James Skulina Executive Vice President and CFO Q&A 1
Slide 3: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including information regarding our guidance for future periods. These forward-looking statements are based on management’s current expectation
Slide 4: Special Notice Regarding Pro Forma and Non-GAAP Information
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. Such pro forma information is based on certain assumptions and adjustments a
Slide 5: TransDigm Overview
TransDigm Overview Distinguishing Characteristics Highly engineered aerospace components Significant aftermarket content Proprietary and sole source products High free cash flow Proprietary Revenues (1) Pro Forma Revenues (1) Pro Forma EBITDA As Defined (1) Non- Proprietary Comm OEM Defense
Slide 6: 2018 Q1 Financial Performance by Markets – Pro Forma
2018 Q1 Financial Performance by Markets – Pro Forma Q1 Market Review – Pro Forma Revenues⁽¹⁾ Actual vs. Prior Year Q1 Commercial OEM: Flat Commercial Aftermarket: Up 10% Defense: Flat (1) Information is on a pro forma basis versus the prior year period and includes the full year impacts of acquisit
Slide 7: Fiscal 2018 Outlook
Fiscal 2018 Outlook FY 2017 Pro Forma FY 2018 Expected Growth - Sales Mix (1) Market Unchanged 30% Commercial OEM Up Mid-Single-Digit % 36% Commercial Aftermarket Up Mid-Single-Digit % 34% Defense Up Low to Mid-Single-Digit % Assumptions Guidance Summary ($ in millions) Full year interest expense
Slide 8: First Quarter 2018 Results
First Quarter 2018 Results ($ in millions, except per share amounts) Q1 FY 2018 Q1 FY 2017 Revenue $848.0 $814.0 4.2% Increase Gross Profit $476.7 $444.3 1.6 Margin Point Increase Margin % 56.2% 54.6% ● Strength of our proprietary products and productivity improvements ● Lower non-operating acquisit
Slide 9: Liquidity & Taxes
Liquidity & Taxes ($ in millions) Cash Taxes Q1 18 12/30/2017 FY 9/30/2017 Net Cash Provided by Operating Activities $292.8 $788.7 Q1 FY 18 GAAP ETR: (63.4%) Capital Expenditures ($15.3) ($71.0) Q1 FY 18 Adjusted ETR: (47.4%) Free Cash Flow $277.5 $717.7 Cash on the Balance Sheet $857.9 $650.6 C
Slide 10: Interest Rate Sensitivity Analysis
Interest Rate Sensitivity Analysis ($ in millions) TDG Weighted Average Pre-Tax After-Tax (1) Cash Cash Cash Cash LIBOR % Interest Exp $ Interest Rate % Interest Exp $ Interest Rate % Current → 1.7% $ 630 5.3% $ 475 4.0% (Full Yr Est.) 2% $ 645 5.5% $ 485 4.2% 3% $ 675 5.8% $ 510 4.4% 4% $ 700 6.1%
Slide 11: Reconciliation of GAAP to Adjusted EPS - Guidance
Reconciliation of GAAP to Adjusted EPS - Guidance Full Year Guidance Thirteen Week Periods Ended Mid-Point December 30, December 31, September 30, 2017 2016 2018 Earnings per share $ 4.60 $ 0.41 $ 15.61 Adjustments to earnings per share: Dividend equivalent payments 1.01 1.70 1.01 Non-cash stock com
Slide 12: Appendix - Reconciliation of Net Income to EBITDA and EBITDA As Defined
Appendix - Reconciliation of Net Income to EBITDA and EBITDA As Defined Thirteen Week ($ in thousands) Periods Ended December 30, December 31, 2017 2016 Net income $ 314,775 $ 118,871 Less: Income from Discontinued Operations, net of tax (1) (2,764) - Income from Continuing Operations 312,011 118,87
Slide 13: Appendix - Reconciliation of Reported EPS to Adjusted EPS
Appendix - Reconciliation of Reported EPS to Adjusted EPS Thirteen Week ($ in thousands, except per Periods Ended share amounts) Reported Earnings Per Share December 30, 2017 December 31, 2016 Net income from continuing operations $ 312,011 $ 118,871 Less: dividends on participating securities (56,1
Slide 14: Appendix - Reconciliation of Net Cash Provided by Operating Activities to EBITDA
Appendix - Reconciliation of Net Cash Provided by Operating Activities to EBITDA and EBITDA As Defined ($ in thousands) Thirteen Week Periods Ended December 30, 2017 December 31, 2016 Net cash provided by operating activities $ 292,811 $ 225,791 Adjustments: Changes in assets and liabilities, net of