Slide 1: FY 2019 Q3 Earnings Call
FY 2019 Q3 Earnings Call August 6, 2019
Slide 2: Agenda
Agenda TransDigm Overview and Highlights Nick Howley Executive Chairman Operating Performance, Market Review Kevin Stein and Outlook President and CEO Financial Results Mike Lisman CFO Q&A 1
Slide 3: Forward Looking Statements & Special Notice Regarding Pro Forma and Non-GAAP Information
Forward Looking Statements & Special Notice Regarding Pro Forma and Non-GAAP Information 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 futur
Slide 4: TransDigm Overview (Excludes Esterline)
TransDigm Overview (Excludes Esterline) 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- Propriet
Slide 5: 2019 Q3 Financial Performance by Markets – Pro Forma (Excludes Esterline)
2019 Q3 Financial Performance by Markets – Pro Forma (Excludes Esterline) Highlights Q3 Review – Pro Forma Revenues⁽¹⁾ 20% Biz Actual vs. Prior Year Jet/Heli Q3 YTD Commercial OEM: 80% Com Transport Commercial OEM: Up 10% Up 10% Q3 ‘19 Commercial Transport Revenue Up 10% Q3 ’19 Business Jet/Heli
Slide 6: Third Quarter 2019 Select Financial Results
Third Quarter 2019 Select Financial Results ($ in millions, except per share amounts) Q3 FY Q3 FY 2019 2018 • 11.8% organic sales growth Revenue $1,658 $981 69.1% Increase • $545M Esterline sales contribution • Lower Esterline gross margins vs. legacy TDG Gross Profit $762 $570 -12.2% Margin Decreas
Slide 7: Third Quarter & YTD 2019 Esterline Results
Third Quarter & YTD 2019 Esterline Results Esterline contribution includes Souriau-Sunbank and other businesses contemplated for potential divestiture Esterline Contribution Q3 FY 19 YTD FY 19 Revenue $545 M $667 M EBITDA As Defined (1) $134 M $161 M EBITDA As Defined Margin 24.6% 24.1% (1) Esterlin
Slide 8: Fiscal 2019 Outlook
Fiscal 2019 Outlook Guidance Summary – INCLUDES 6.5 Months of Esterline ($ in millions) FY 19 Current Guidance (1) FY 19 Guidance Midpoint Change (1) Low High Current Prior ∆ Revenues $ 5,500 $ 5,550 Revenues $ 5,525 $ 5,440 $ 85 EBITDA As Defined $ 2,425 $ 2,445 EBITDA As Defined $ 2,435 $ 2,345 $
Slide 9: Fiscal 2019 Outlook - Continued
Fiscal 2019 Outlook - Continued Market Growth Assumptions FY 2018 Pro Forma Prior (2) Current (2) Sales Mix (1) - FY 2019 Expected Growth - FY 2019 Expected Growth - Excludes Esterline Market Excludes Esterline Excludes Esterline 29% Commercial OEM Up MSD% Up MSD% to HSD% 36% Commercial Aftermarket
Slide 10: Reconciliation of Fiscal 2019 Outlook
Reconciliation of Fiscal 2019 Outlook ($ in millions, except per share amounts) FY 19 Guidance Midpoint (2) Current Prior Δ Net income $ 776 $ 705 $ 71 Adjustments: Depreciation and amortization expense 220 220 0 Interest expense - net 865 880 -15 Current Guide primarily Income tax provision 247 227
Slide 11: Liquidity & Taxes
Liquidity & Taxes ($ in millions) Cash Pro Forma Capital Structure Actual YTD Q3 FY19 FY 18 ($ in millions) 6/29/19 Rate 6/29/19 9/30/18 Net Cash Provided by $760mm revolver – L + 3.000% Operating Activities $768.4 $1,022.2 $350mm AR securitization facility 300 L + 0.900% First lien term loan E due
Slide 12: Reconciliation of GAAP to Adjusted EPS - Guidance
Reconciliation of GAAP to Adjusted EPS - Guidance Full Year Guidance Thirteen Week Periods Ended Thirty-Nine Week Periods Ended Mid-Point June 29, June 30, June 29, June 30, September 30, 2019 2018 2019 2018 2019 Earnings per share from continuing operations $ 2.57 $ 3.91 $ 9.22 $ 12.14 $ 13.35 Adju
Slide 13: APPENDIX
TRANSDIGM 29: * APPENDIX 12
Slide 14: Appendix: Depreciation & Amortization Reconciliation
Appendix: Depreciation & Amortization Reconciliation ($ in millions) (1) FY 19 Guidance Midpoint FY 19 Pro Forma Assumes 12 months of ESL Current Prior Change ownership Depreciation expense $ 96 $ 96 $ - $ 122 Amortization (ex backlog) 92 92 0 99 Total depreciation and amortization (ex backlog) $ 18
Slide 15: Appendix - Reconciliation of Net Income to EBITDA and EBITDA As Defined
Appendix - Reconciliation of Net Income to EBITDA and EBITDA As Defined ($ in thousands) Thirteen Week Periods Ended Thirty-Nine Week Period Ended June29, 2019 June30, 2018 June29, 2019 June30, 2018 Net income including noncontrolling interests $ 144,610 $ 217,246 $ 543,284 $ 728,299 Less: Loss from
Slide 16: Appendix - Reconciliation of Reported EPS to Adjusted EPS
Appendix - Reconciliation of Reported EPS to Adjusted EPS ($ in thousands, except per share amounts) Thirteen Week Periods Ended Thirty-Nine Week Periods Ended Reported Earnings Per Share June 29, 2019 June 30, 2018 June 29, 2019 June 30, 2018 Income from continuing operations including noncontrolli
Slide 17: Appendix - Reconciliation of Net Cash Provided by Operating Activities to EBITDA and EBITDA As Defined
Appendix - Reconciliation of Net Cash Provided by Operating Activities to EBITDA and EBITDA As Defined Thirty-Nine Week periods Ended ($ in thousands) June 29, 2019 June 30, 2018 Net cash provided by operating activities $ 768,356 $ 690,910 Adjustments: Changes in assets and liabilities, net of effe