Slide 1: FY 2017 Third Quarter Earnings Conference Call
FY 2017 Third Quarter Earnings Conference Call August 8, 2017
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 Terrance Paradie 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 OEM Defense Comm
Slide 6: 2017 Q3 Financial Performance by Markets – Pro Forma
2017 Q3 Financial Performance by Markets – Pro Forma Highlights⁽¹⁾ Q3 Market Review – Pro Forma Revenues⁽¹⁾ Actual vs. Prior Year Q3 YTD Commercial OEM Commercial OEM: Down 1% Flat Q3 FY17 commercial transport revenue up 1% Commercial Aftermarket - Transport: Up 7.5% Up 3.5% Commercial Aftermarket
Slide 7: Commercial Aftermarket Submarket Pro Forma Revenue Trends
Commercial Aftermarket Submarket Pro Forma Revenue Trends (1) Commercial Aftermarket % of FY14 - FY16 FY17 YTD FY 17 Q3 Submarket Revenue 3 YR Avg. Commercial Transport - Passenger 60% 10% 8% 12% Commercial Transport - Interior 10% 14% (14%) (19%) Commercial Transport - Freight 15% (1%) (1%) 9% Busi
Slide 8: Fiscal 2017 Outlook
Fiscal 2017 Outlook FY 2016 Pro Forma Sales Mix (1) Market FY 2017 Expected Growth 30% Commercial OEM Up Low Single-Digit % 37% Commercial Aftermarket Up Low to Mid Single-Digit % 33% Defense Up Low to Mid Single-Digit % Assumptions Guidance Summary ($ in millions) Full year interest expense ≈ $60
Slide 9: Third Quarter 2017 Results
Third Quarter 2017 Results ($ in millions, except per share amounts) Q3 FY 2017 Q3 FY 2016 Revenue $907.7 $797.7 13.8% Increase Gross Profit $521.8 $443.5 1.9 Margin Point Increase Margin % 57.5% 55.6% ● Strength of our proprietary products and productivity improvements SG&A $110.6 $94.2 % to Sales
Slide 10: Liquidity & Taxes
Liquidity & Taxes ($ in millions) Cash Taxes YTD 7/1/2017 FY 9/30/2016 Net Cash Provided by Operating Activities $555.2 $668.9 YTD FY 17 GAAP ETR: 25% Capital Expenditures ($55.7) ($44.0) YTD FY 17 Adjusted ETR: 31% Free Cash Flow $499.5 $624.9 Cash on the Balance Sheet $970.6 $1,587.0 Capitaliz
Slide 11: Interest Rate Sensitivity Analysis
Interest Rate Sensitivity Analysis ($ in millions) TDG Weighted Average Pre-Tax After-Tax (1) Cash Cash Cash Cash LIBOR % Interest Exp $ Interest Rate % Interest Exp $ Interest Rate % Current → 1.0% $ 580 5.2% $ 400 3.6% 2% $ 620 5.6% $ 430 3.9% 4% $ 685 6.1% $ 470 4.2% 6% $ 740 6.6% $ 510 4.6% (1)
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 July 1, July 2, July 1, July 2, September 30, 2017 2016 2017 2016 2017 Earnings per share $ 3.08 $ 2.88 $ 6.23 $ 7.63 $ 9.28 Adjustments to earnings per share: Di
Slide 13: 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 Thirty-Nine Week Periods Ended July 1, July 2, July 1, July 2, 2017 2016 2017 2016 Net income $ 169,053 $ 160,622 $ 443,429 $ 431,746 Adjustments: Depreciation and amortization expens
Slide 14: Appendix - Reconciliation of Reported EPS to Adjusted EPS
Appendix - Reconciliation of Reported EPS to Adjusted EPS ($ in thousands, except per share amounts) Thirteen Week Thirty-Nine Week Periods Ended Periods Ended Reported Earnings Per Share July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 Net income $ 169,053 $ 160,622 $ 443,429 $ 431,746 Less: div
Slide 15: 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) Thirty-Nine Week Periods Ended July 1, 2017 July 2, 2016 Net cash provided by operating activities $ 555,216 $ 482,176 Adjustments: Changes in assets and liabilities, net of effect
Slide 16: Appendix – Current Fiscal Year 2017 Guidance Versus Prior Guidance
Appendix – Current Fiscal Year 2017 Guidance Versus Prior Fiscal Year 2017 Guidance ($ in millions, except per share amounts) Current Current Fiscal Year 2017 Fiscal Year 2017 Guidance Guidance Change at Issued August 8, 2017 Issued May 9, 2017 Mid-Point Sales $3,530 to $3,570 $3,530 to $3,570 - GAA