Slide 1: FY 2018 Fourth Quarter Earnings Conference Call
FY 2018 Fourth Quarter Earnings Conference Call November 6, 2018
Slide 2: Agenda
Agenda TransDigm Overview and Highlights W. Nicholas Howley Executive Chairman Operating Performance, Market Review Kevin Stein and Outlook President and CEO Financial Results Michael Lisman 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: 2018 Q4 Financial Performance by Markets – Pro Forma
2018 Q4 Financial Performance by Markets – Pro Forma Q4 Market Review – Pro Forma Revenues⁽¹⁾ Actual vs. Prior Year Q4 YTD Commercial OEM: Up 6% UP 1% Commercial Aftermarket: Up 6% Up 9% Defense: Up 12% Up 5% (1) Information is on a pro forma basis versus the prior year period and includes the full
Slide 7: Fiscal 2019 Outlook
Fiscal 2019 Outlook FY 2018 Pro Forma Sales Mix (1) Market FY 2019 Expected Growth 28% Commercial OEM Up Low to Mid-Single-Digit % 37% Commercial Aftermarket Up Mid to High-Single-Digit % 35% Defense Up Mid to High-Single-Digit % Assumptions Guidance Summary ($ in millions) Full year interest expe
Slide 8: Fourth Quarter 2018 Results
Fourth Quarter 2018 Results ($ in millions, except per share amounts) Q4 FY 2018 Q4 FY 2017 Revenue $1,049.4 $923.9 13.6% Increase Dilutive impact from higher acquisition costs and dilutive acquisition margin mix ≈ 1.5% Gross Profit $597.3 $531.2 0.6% Margin Decrease Margin % 56.9% 57.5% Strength of
Slide 9: Full Year 2018 Results
Full Year 2018 Results ($ in millions, except per share amounts) Full Year FYE Full Year FYE 9/30/ 2018 9/30/2017 Dilutive impact from higher Revenue $3,811.1 $3,504.3 8.8% Increase acquisition costs and dilutive acquisition margin mix ≈ 1% Gross Profit $2,177.5 $1,984.6 0.5% Margin Point Increase M
Slide 10: Liquidity & Taxes
Liquidity & Taxes Cash Taxes ($ in millions) FY 9/30/18 FY 9/30/17 Net Cash Provided by FY 18 GAAP ETR: 2.4% Operating Activities $1,022.2 $788.7 Capital Expenditures ($73.3) ($71.0) FY 18 Adjusted ETR: 8.9% Free Cash Flow $948.9 $717.7 Cash on the Balance Sheet $2,073.0 $650.6 Capitalization Ne
Slide 11: Reconciliation of GAAP to Adjusted EPS - Guidance
Reconciliation of GAAP to Adjusted EPS ‐ Guidance Full Year Guidance Thirteen Week Periods Ended Fiscal Years Ended Mid-Point September 30, September 30, September 30, September 30, September 30, 2018 2017 2018 2017 2019 Earnings per share from continuing operations $ 4.14 $ 2.21 $ 16.28 $ 8.45 $ 14
Slide 12: Appendix – Interest Rate Sensitivity
Appendix – Interest Rate Sensitivity $ in millions Current FY 19 Guidance LIBOR % - FY Weighted Average (1) ~ 2.75% 3.0% 4.0% Interest Expense - Pre-Tax (2) $745 $754 $787 Interest Rate - Pre-Tax 5.7% 5.8% 6.1% (1) FY Weighted Average Libor % is the average Libor for TDG's 2019 fiscal year based on
Slide 13: Appendix - Reconciliation of Net Income to EBITDA and EBITDA As Defined
Appendix ‐ Reconciliation of Net Income to EBITDA and EBITDA As Defined ($ in thousands) Thirteen Week Periods Ended Fiscal Years Ended September 30, September 30, September 30, September 30, 2018 2017 2018 2017 Net i ncome $ 228,763 $ 153,458 $ 957,062 $ 596,887 (1) Les s : Los s from Di s conti nu
Slide 14: Appendix - Reconciliation of Reported EPS to Adjusted EPS
Appendix ‐ Reconciliation of Reported EPS to Adjusted EPS ($ in thousands, except per Thirteen Week Periods Ended Fiscal Years Ended share amounts) Reported Earnings Per Share September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017 Net income from continuing operations $ 230,294
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) Fiscal Years Ended September 30, 2018 September 30, 2017 Net cash provided by operating activities $ 1,022,173 $ 788,733 Adjustments: Changes in assets and liabilities, net of effe