Slide 1: FY 2017 First Quarter Earnings Conference Call
FY 2017 First Quarter Earnings Conference Call February 7, 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 Q1 Financial Performance by Markets – Pro Forma
2017 Q1 Financial Performance by Markets – Pro Forma Highlights⁽¹⁾ Q1 Market Review – Pro Forma Revenues⁽¹⁾ Actual vs. Prior Year Q1 Commercial OEM Commercial OEM: Down 4% Commercial transport bookings up modestly Commercial Aftermarket Commercial Aftermarket: Up 3.5% Commercial transport bookin
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 to High Single-Digit % 32% Defense Flat to Slightly Up Assumptions Guidance Summary ($ in millions) Full year interest expense ≈ $588
Slide 8: First Quarter 2017 Results
First Quarter 2017 Results ($ in millions, except per share amounts) Q1 FY 2017 Q1 FY 2016 Revenue $814.0 $701.7 16.0% Increase Gross Profit $444.3 $374.6 1.2 Margin Point Increase Margin % 54.6% 53.4% ● Higher acquisition-related costs ● Strength of our proprietary products and productivity improve
Slide 9: Liquidity & Taxes
Liquidity & Taxes ($ in millions) Cash Taxes Q1 FY 2017 12/31/2016 FY 9/30/2016 Net Cash Provided by Operating Activities $225.8 $668.9 Q1 FY 17 GAAP ETR: 14.4% Capital Expenditures ($21.8) ($44.0) Q1 FY 17 Adjusted ETR: 30.8% Free Cash Flow $204.0 $624.9 Cash on the Balance Sheet $972.4 $1,587.
Slide 10: Interest Rate Sensitivity Analysis
Interest Rate Sensitivity Analysis ($ 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% $ 560 5.1% $ 385 3.5% 2% $ 605 5.5% $ 420 3.8% 4% $ 670 6.1% $ 460 4.2% 6% $ 725 6.6% $ 500 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 Mid-Point December 31, January 2, September 30, 2016 2016 2017 Earnings per share $ 0.41 $ 2.23 $ 9.29 Adjustments to earnings per share: Dividend equivalent payment 1.70 0.05 1.71 Non-cash stock compens
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 December 31, January 2, 2016 2016 Net income $ 118,871 $ 129,441 Adjustments: Depreciation and amortization expense 38,048 26,201 Interest expense - net 146,004 111,983 Income tax pro
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 December 31, Reported Earnings Per Share January 2, 2016 2016 Net income $ 118,871 $ 129,441 Less: dividends on participating securities (95,971) (3,000) Net income applic
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) Thirteen Week Periods Ended December 31, 2016 January 2, 2016 Net cash provided by operating activities $ 225,791 $ 178,669 Adjustments: Changes in assets and liabilities, net of e