Slide 1: FY 2017 Fourth Quarter Earnings Conference Call
FY 2017 Fourth Quarter Earnings Conference Call November 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 Q4 Financial Performance by Markets – Pro Forma
2017 Q4 Financial Performance by Markets – Pro Forma Q4 Market Review – Pro Forma Revenues⁽¹⁾ Actual vs. Prior Year Q4 YTD Commercial OEM: Flat Flat Commercial Aftermarket: Up 4% Up 3% Defense: Up 3% Up 4% (1) Information is on a pro forma basis versus the prior year period and includes the full yea
Slide 7: Fiscal 2018 Outlook
Fiscal 2018 Outlook FY 2017 Pro Forma Sales Mix (1) Market FY 2018 Expected Growth 30% Commercial OEM Up Mid-Single-Digit % 37% Commercial Aftermarket Up Mid-Single-Digit % 33% Defense Up Low to Mid-Single-Digit % Assumptions Guidance Summary ($ in millions) Full year interest expense ≈ $650 milli
Slide 8: Fourth Quarter 2017 Results
Fourth Quarter 2017 Results ($ in millions, except per share amounts) Q4 FY 2017 Q4 FY 2016 Revenue $923.9 $875.2 5.6% Increase Gross Profit $531.2 $484.3 2.2 Margin Point Increase Margin % 57.5% 55.3% ● Strength of our proprietary products and productivity improvements ● Lower non-operating acquisi
Slide 9: Liquidity & Taxes
Liquidity & Taxes ($ in millions) Cash Taxes FY 9/30/2017 FY 9/30/2016 Net Cash Provided by Operating Activities $788.7 $683.3 FY 17 Full Year GAAP ETR: 24.9% Capital Expenditures ($71.0) ($44.0) FY 17 Full Year Adjusted ETR: 30.5% Free Cash Flow $717.7 $639.3 Cash on the Balance Sheet $650.6 $1
Slide 10: Interest Rate Sensitivity Analysis
Interest Rate Sensitivity Analysis ($ in millions) TDG Weighted Average Pre-Tax After-Tax (1) Cash Cash Cash Cash LIBOR % Interest Exp $ Interest Rate % Interest Exp $ Interest Rate % Current → 1.3% $ 625 5.3% $ 430 3.7% 2% $ 650 5.5% $ 450 3.8% 3% $ 690 5.8% $ 475 4.0% 6% $ 780 6.6% $ 540 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 Fiscal Years Ended Mid-Point September 30, September 30, September 30, September 30, September 30, 2017 2016 2017 2016 2018 Earnings per share $ 2.21 $ 2.77 $ 8.45 $ 10.39 $ 11.93 Adjustments to earnings
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 ($ in thousands) Periods Ended Fiscal Years Ended September 30, September 30, September 30, September 30, 2017 2016 2017 2016 Net income $ 153,458 $ 154,668 $ 596,887 $ 586,414 Loss from Discontinued Operations (30
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 Periods Ended Fiscal Years Ended Reported Earnings Per Share September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016 Net income from continuing operations $ 184,147
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 Fiscal Years Ended ($ in thousands) September 30, 2017 September 30, 2016 Net cash provided by operating activities $ 788,733 $ 683,298 Adjustments: Changes in assets and liabilities, net of effect