Slide 1: FY 2017 Second Quarter Earnings Conference Call
FY 2017 Second Quarter Earnings Conference Call May 9, 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 Q2 Financial Performance by Markets – Pro Forma
2017 Q2 Financial Performance by Markets – Pro Forma Highlights⁽¹⁾ Q2 Market Review – Pro Forma Revenues⁽¹⁾ Actual vs. Prior Year Q2 YTD Commercial OEM Commercial OEM: Up 2% Flat Commercial transport revenue up 4% in Qtr Commercial transport bookings up modestly YTD Commercial Aftermarket Commer
Slide 7: Fiscal 2017 Outlook
Fiscal 2017 Outlook FY 2016 Pro Forma Sales Mix (1) Market FY 2017 Expected Growth 31% Commercial OEM Up Low to Mid Single-Digit % 37% Commercial Aftermarket Up Mid Single-Digit % 32% Defense Up Low Single-Digit % Assumptions Guidance Summary ($ in millions) Full year interest expense ≈ $600 milli
Slide 8: Second Quarter 2017 Results
Second Quarter 2017 Results ($ in millions, except per share amounts) Q2 FY 2017 Q2 FY 2016 Revenue $873.2 $796.8 9.6% Increase Gross Profit $491.1 $425.7 2.8 Margin Point Increase Margin % 56.2% 53.4% ● Strength of our proprietary products and productivity improvements ● Lower acquisition-related c
Slide 9: Liquidity & Taxes
Liquidity & Taxes ($ in millions) Cash Taxes YTD 4/1/2017 FY 9/30/2016 Net Cash Provided by Operating Activities $390.5 $668.9 YTD FY 17 GAAP ETR: 22.5% Capital Expenditures ($38.4) ($44.0) YTD FY 17 Adjusted ETR: 30.8% Free Cash Flow $352.1 $624.9 Cash on the Balance Sheet $985.4 $1,587.0 Capit
Slide 10: Interest Rate Sensitivity Analysis
Interest Rate Sensitivity Analysis ($ in millions) TDG Weighted Average Pre-Tax After-Tax (1) Cash Cash Cash Cash LIBOR % Interest Exp $ Interest Rate % Interest Exp $ Interest Rate % Current → 1.0% $ 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 11: Reconciliation of GAAP to Adjusted EPS - Guidance
Reconciliation of GAAP to Adjusted EPS - Guidance Full Year Guidance Thirteen Week Periods Ended Twenty-Six Week Periods Ended Mid-Point April 1, April 2, April 1, April 2, September 30, 2017 2016 2017 2016 2017 Earnings per share $ 2.78 $ 2.52 $ 3.17 $ 4.75 $ 9.28 Adjustments to earnings per share:
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 Twenty-Six Week ($ in thousands) Periods Ended Periods Ended April 1, April 2, April 1, April 2, 2017 2016 2017 2016 Net income $ 155,505 $ 141,683 $ 274,376 $ 271,124 Adjustments: Depreciation and amortization exp
Slide 13: Appendix - Reconciliation of Reported EPS to Adjusted EPS
Appendix - Reconciliation of Reported EPS to Adjusted EPS ($ in thousands, except per share amounts) Thirteen Week Twenty-Six Week Periods Ended Periods Ended Reported Earnings Per Share April 1, 2017 April 2, 2016 April 1, 2017 April 2, 2016 Net income $ 155,505 $ 141,683 $ 274,376 $ 271,124 Less:
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) Twenty-Six Week Periods Ended April 1, 2017 April 2, 2016 Net cash provided by operating activities $ 390,500 $ 286,880 Adjustments: Changes in assets and liabilities, net of effec
Slide 15: Appendix – Current Fiscal Year 2017 Guidance Versus Prior Fiscal Year 2017 Guidance
Appendix – Current Fiscal Year 2017 Guidance Versus Prior Fiscal Year 2017 Guidance ($ in millions, except per share amounts) Current Prior Fiscal Year 2017 Fiscal Year 2017 Guidance Guidance Change at Issued May 9, 2017 Issued February 7, 2017 Mid-Point Sales $3,530 to $3,570 $3,520 to $3,570 $5 GA