Slide 1: FY 2019 Q2 Earnings Call
FY 2019 Q2 Earnings Call May 7, 2019
Slide 2: Agenda
Agenda TransDigm Overview and Highlights Nick Howley Executive Chairman Operating Performance, Market Review, Kevin Stein Outlook and Esterline Integration 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: 2019 Q2 Financial Performance by Markets – Pro Forma (Excludes Esterline)
2019 Q2 Financial Performance by Markets – Pro Forma (Excludes Esterline) Highlights Q2 Review – Pro Forma Revenues⁽¹⁾ 20% Biz Actual vs. Prior Year Jet/Heli Commercial OEM: Q2 YTD Q2 ‘19 Commercial Transport Revenue Up 6% 80% Com Q2 ’19 Business Jet/Helicopter Revenue Up Over 20% Transport Comm
Slide 5: Second Quarter 2019 Results
Second Quarter 2019 Results ($ in millions, except per share amounts) Q2 FY 2019 Q2 FY 2018 TransDigm Excluding TransDigm Esterline & Esterline & TransDigm Consolidated New Debt New Debt Consolidated Revenue $1,195.9 $122.0 $1,073.9 $933.1 15.1% Increase Dilutive impact from higher acquisition costs
Slide 6: Fiscal 2019 Outlook
Fiscal 2019 Outlook Guidance Summary – INCLUDES 6.5 Months of Esterline ($ in millions) FY 19 Current Guidance (1) FY 19 Guidance Midpoint Change (1) Low High Current Prior ∆ Revenues $ 5,395 $ 5,485 Revenues $ 5,440 $ 4,190 $ 1,250 EBITDA As Defined $ 2,325 $ 2,365 EBITDA As Defined $ 2,345 $ 2,090
Slide 7: 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 LSD to MSD% Up MSD% 36% Commercial Aftermarket U
Slide 8: Reconciliation of Fiscal 2019 Outlook
Reconciliation of Fiscal 2019 Outlook ($ in millions, except per FY 19 Guidance Midpoint (2) share amounts) Current Prior Δ Net income $ 705 $ 874 $ (169) Adjustments: Depreciation and amortization expense (ex backlog) 188 139 49 Backlog amortization expense 32 4 28 Interest expense - net 880 725 15
Slide 9: Liquidity & Taxes
Liquidity & Taxes ($ in millions) Cash Pro Forma Capital Structure Actual YTD Q2 FY19 FY 18 3/30/19 9/30/18 ($ in millions) 3/30/19 Rate Net Cash Provided by $760mm revolver – L + 3.000% Operating Activities $453.0 $1,022.2 $350mm AR securitization facility 300 L + 0.900% Capital Expenditures ($43.4
Slide 10: 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 March 30, March 31, March 30, March 31, September 30, 2019 2018 2019 2018 2019 Earnings per share from continuing operations $ 3.60 $ 3.63 $ 6.65 $ 8.23 $ 12.09 Ad
Slide 11: Esterline Overview
TRANSDIGM 29: * ESTERLINE OVERVIEW 10
Slide 12: Esterline: …A Misunderstood Business
Esterline: …A Misunderstood Business Esterline Overview Net Sales Breakdown FY 2018 Esterline designs and manufactures highly- Core Aerospace and engineered products primarily for the By Sector Defense by Market aerospace and defense industry FY 2018 net sales: $2,035M FY 2018 EBITDA As Defined(
Slide 13: Esterline: Overview
Esterline: Overview Standalone Operating Units Products – Avionics & Electronics, Sensors & Connectors, Advanced Materials 12
Slide 14: Esterline: Acquisition Rationale
Esterline: Acquisition Rationale Esterline is a misunderstood business, with characteristics more similar to TransDigm than appreciated Core Esterline Highly proprietary and sole source aerospace product offerings Significant aftermarket exposure Strong positions on a broad base of good and growing
Slide 15: Esterline: Integration Plan
Esterline: Integration Plan Close Esterline’s Bellevue corporate office Administration / Corporate Office Eliminate operational layers Educate the key principles of TransDigm’s value creation strategy Operating Culture Focus on new business and the aftermarket Decentralized organization in
Slide 16: Appendix
TRANSDIGM 29: * APPENDIX 15
Slide 17: Appendix: ADJ EPS Guidance Midpoint Bridge
Appendix: ADJ EPS Guidance Midpoint Bridge $16.76 $16.81 Base TDG ESL New Debt Prior Current FY19 Adj EPS FY19 Adj EPS Guidance Guidance Midpoint (1) Incremental 6.5 months Partially fund ESL Midpoint (1) EBITDA ownership + allow financial flexibility (1) Prior FY 19 Adjusted EPS guidance issued 2/5
Slide 18: Appendix: Depreciation & Amortization Reconciliation
Appendix: Depreciation & Amortization Reconciliation ($ in millions) (1) FY 19 Guidance Midpoint FY 19 Pro Forma Δ= 6.5 Assumes 12 months of ESL months of ownership in ESL Current Prior FY 19 ownership Depreciation expense $ 96 $ 66 $ 30 $ 122 Amortization (ex backlog) 92 73 19 99 Total depreciation
Slide 19: 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 Twenty-Six Week Period Ended March 30, 2019 March 31, 2018 March 30, 2019 March 31, 2018 Net income including noncontrolling interests $ 202,632 $ 196,278 $ 398,674 $ 511,053 Less: Lo
Slide 20: 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 Twenty-Six Week Periods Ended Reported Earnings Per Share March 30, 2019 March 31, 2018 March 30, 2019 March 31, 2018 Income from continuing operations including noncontro
Slide 21: 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 Twenty-Six Week periods Ended ($ in thousands) March 30, 2019 March 31, 2018 Net cash provided by operating activities $ 452,997 $ 453,684 Adjustments: Changes in assets and liabilities, net of eff