TransDigm Group Reports Fiscal 2021 Fourth Quarter And Year-End Results
Fourth quarter highlights include:
- Net sales of
$1,279 million , up 9% from$1,173 million in the prior year's quarter; - Income from continuing operations of
$209 million , up 107% from$101 million ; - Earnings per share from continuing operations of
$3.58 , up 103% from$1.76 ; - EBITDA As Defined of
$636 million , up 28% from$498 million ; - EBITDA As Defined margin of 49.7%, representing sequential improvement;
- Adjusted earnings per share of
$4.25 , up 47% from$2.89 in the prior year's quarter; and - Strong operating cash flow generation of
$289 million .
Fiscal 2021 highlights include:
- Net sales of
$4,798 million , down 6% from$5,103 million in the prior fiscal year; - Income from continuing operations of
$681 million , up 4% from$653 million ; - Earnings per share from continuing operations of
$10.41 , up 28% from$8.14 ; - EBITDA As Defined of
$2,189 million , down 4% from$2,278 million ; - EBITDA As Defined margin of 45.6%, up 100 basis points from the prior fiscal year; and
- Adjusted earnings per share of
$12.13 , down 16% from$14.47 in the prior fiscal year.
While the Company is not providing full financial guidance at this time as a result of the continued disruption in our primary commercial end markets, today's earnings call will include guidance on select financial metrics for fiscal 2022 including EBITDA As Defined margins, expected defense market revenue growth, tax rates, and select other financial assumptions.
Quarter-to-Date Results
Net sales for the quarter increased 9.0%, or
Income from continuing operations for the quarter increased
Adjusted net income for the quarter increased 49.4% to
EBITDA for the quarter increased 48.1% to
"Trends remain favorable for the recovery of the commercial aerospace industry. Air traffic continues to improve globally, along with vaccination rates. The recovery remains primarily driven by domestic air travel, though international travel restrictions are starting to soften in certain markets, which is encouraging," stated
Year-to-Date Results
Fiscal 2021 net sales declined 6.0%, or
Fiscal 2021 income from continuing operations was
GAAP earnings per share were reduced in fiscal 2021 and 2020 by
Fiscal 2021 adjusted net income decreased 14.6% to
Fiscal 2021 EBITDA decreased 1.2% to
The effective tax rate for the full-year fiscal 2021 was 4.7% compared to 11.7% in fiscal 2020. The effective tax rate for fiscal 2021 was positively impacted by the release of the valuation allowance applicable to the net interest deduction limitation carryforward and the discrete impact of excess tax benefits associated with share-based payments.
Please see the attached tables for a reconciliation of income from continuing operations to EBITDA, EBITDA As Defined, and adjusted net income; a reconciliation of net cash provided by operating activities to EBITDA and EBITDA As Defined, and a reconciliation of earnings per share to adjusted earnings per share for the periods discussed in this press release.
Fiscal 2022 Outlook
Given the considerable uncertainty around the extent and duration of business disruptions related to the COVID-19 pandemic and its impact on our primary commercial OEM and commercial aftermarket end markets, the Company will not provide full fiscal year 2022 guidance at this time. Information regarding fiscal 2022 EBITDA As Defined margins, expected defense market revenue growth, tax rates, interest expense, capital expenditures and select accounting information is included in the slide presentation available for today's earnings call.
Earnings Conference Call
The call will be archived on the website and available for replay at approximately
About
Non-GAAP Supplemental Information
EBITDA, EBITDA As Defined, EBITDA As Defined Margin, adjusted net income and adjusted earnings per share are non-GAAP financial measures presented in this press release as supplemental disclosures to net income and reported results.
None of EBITDA, EBITDA As Defined, EBITDA As Defined Margin, adjusted net income or adjusted earnings per share is a measurement of financial performance under
Although we use EBITDA and EBITDA As Defined as measures to assess the performance of our business and for the other purposes set forth above, the use of these non-GAAP financial measures as analytical tools has limitations, and you should not consider any of them in isolation, or as a substitute for analysis of our results of operations as reported in accordance with
- neither EBITDA nor EBITDA As Defined reflects the significant interest expense, or the cash requirements, necessary to service interest payments on our indebtedness;
- although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and neither EBITDA nor EBITDA As Defined reflects any cash requirements for such replacements;
- the omission of the substantial amortization expense associated with our intangible assets further limits the usefulness of EBITDA and EBITDA As Defined;
- neither EBITDA nor EBITDA As Defined includes the payment of taxes, which is a necessary element of our operations; and
- EBITDA As Defined excludes the cash expense we have incurred to integrate acquired businesses into our operations, which is a necessary element of certain of our acquisitions.
Forward-Looking Statements
Statements in this press release that are not historical facts, including statements under the heading "Fiscal 2022 Outlook," are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "believe," "may," "will," "should," "expect," "intend," "plan," "predict," "anticipate," "estimate," or "continue" and other words and terms of similar meaning may identify forward-looking statements.
All forward-looking statements involve risks and uncertainties that could cause
Contact: |
Investor Relations |
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216-706-2945 |
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
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FOR THE THIRTEEN WEEK PERIODS AND FISCAL YEARS ENDED |
Table 1 |
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(Amounts in millions, except per share amounts) |
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(Unaudited) |
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Thirteen Week Periods Ended |
Fiscal Years Ended |
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|
|
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|
$ |
1,279 |
$ |
1,173 |
$ |
4,798 |
$ |
5,103 |
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COST OF SALES |
554 |
637 |
2,285 |
2,456 |
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GROSS PROFIT |
725 |
536 |
2,513 |
2,647 |
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SELLING AND ADMINISTRATIVE EXPENSES |
154 |
182 |
685 |
727 |
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AMORTIZATION OF INTANGIBLE ASSETS |
36 |
41 |
137 |
169 |
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INCOME FROM OPERATIONS |
535 |
313 |
1,691 |
1,751 |
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INTEREST EXPENSE—NET |
261 |
267 |
1,059 |
1,029 |
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REFINANCING COSTS |
1 |
1 |
37 |
28 |
||||||||||||
OTHER INCOME |
(14) |
(31) |
(51) |
(46) |
||||||||||||
GAIN ON SALE OF BUSINESSES—NET |
— |
— |
(69) |
— |
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INCOME FROM CONTINUING OPERATIONS |
287 |
76 |
715 |
740 |
||||||||||||
INCOME TAX PROVISION (BENEFIT) |
78 |
(25) |
34 |
87 |
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INCOME FROM CONTINUING OPERATIONS |
209 |
101 |
681 |
653 |
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(LOSS) INCOME FROM DISCONTINUED |
— |
(19) |
— |
47 |
||||||||||||
NET INCOME |
209 |
82 |
681 |
700 |
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LESS: NET INCOME ATTRIBUTABLE TO |
— |
— |
(1) |
(1) |
||||||||||||
NET INCOME ATTRIBUTABLE TO TD GROUP |
$ |
209 |
$ |
82 |
$ |
680 |
$ |
699 |
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NET INCOME APPLICABLE TO TD GROUP |
$ |
209 |
$ |
82 |
$ |
607 |
$ |
514 |
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Earnings per share attributable to |
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Earnings per share from continuing operations— |
$ |
3.58 |
$ |
1.76 |
$ |
10.41 |
$ |
8.14 |
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(Loss) Earnings per share from discontinued |
— |
(0.33) |
— |
0.82 |
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Earnings per share |
$ |
3.58 |
$ |
1.43 |
$ |
10.41 |
$ |
8.96 |
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Cash dividends paid per common share |
$ |
— |
$ |
— |
$ |
— |
$ |
32.50 |
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Weighted-average shares outstanding: |
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Basic and diluted |
58.4 |
57.3 |
58.4 |
57.3 |
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SUPPLEMENTAL INFORMATION - RECONCILIATION OF EBITDA, |
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EBITDA AS DEFINED TO INCOME FROM CONTINUING OPERATIONS |
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FOR THE THIRTEEN WEEK PERIODS AND FISCAL YEARS ENDED |
Table 2 |
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(Amounts in millions, except per share amounts) |
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(Unaudited) |
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Thirteen Week Periods Ended |
Fiscal Years Ended |
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|
|
|
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Income from continuing operations |
$ |
209 |
$ |
101 |
$ |
681 |
$ |
653 |
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Adjustments: |
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Depreciation and amortization expense |
65 |
71 |
253 |
283 |
||||||||||||
Interest expense, net |
261 |
267 |
1,059 |
1,029 |
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Income tax provision (benefit) |
78 |
(25) |
34 |
87 |
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EBITDA |
613 |
414 |
2,027 |
2,052 |
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Adjustments: |
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Acquisition and divestiture transaction- |
11 |
13 |
35 |
31 |
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Non-cash stock compensation expense (2) |
23 |
34 |
129 |
93 |
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Refinancing costs (3) |
1 |
1 |
37 |
28 |
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COVID-19 pandemic restructuring costs (4) |
— |
23 |
40 |
54 |
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Gain on sale of businesses, net (5) |
— |
— |
(69) |
— |
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Other, net (6) |
(12) |
13 |
(10) |
20 |
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Gross Adjustments to EBITDA |
23 |
84 |
162 |
226 |
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EBITDA As Defined |
$ |
636 |
$ |
498 |
$ |
2,189 |
$ |
2,278 |
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EBITDA As Defined, Margin (7) |
49.7 |
% |
42.4 |
% |
45.6 |
% |
44.6 |
% |
(1) Represents accounting adjustments to inventory associated with acquisitions of businesses and product lines that were charged to cost of sales when the inventory was sold; costs incurred to integrate acquired businesses and product lines into |
(2) Represents the compensation expense recognized by |
(3) Represents costs expensed related to debt financing activities, including new issuances, extinguishments, refinancings and amendments to existing agreements. |
(4) Represents restructuring costs related to the Company's cost reduction measures in response to the COVID-19 pandemic ( |
(5) Represents the net gain on completed divestitures. |
(6) Primarily represents the gain on insurance proceeds from the |
(7) The EBITDA As Defined margin represents the amount of EBITDA As Defined as a percentage of net sales. |
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SUPPLEMENTAL INFORMATION - RECONCILIATION OF |
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REPORTED EARNINGS PER SHARE TO |
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ADJUSTED EARNINGS PER SHARE |
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FOR THE THIRTEEN WEEK PERIODS AND FISCAL YEARS ENDED |
Table 3 |
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(Amounts in millions, except per share amounts) |
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(Unaudited) |
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Thirteen Week Periods Ended |
Fiscal Years Ended |
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Reported Earnings Per Share |
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Income from continuing operations |
$ |
209 |
$ |
101 |
$ |
681 |
$ |
653 |
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Less: Net income attributable to noncontrolling interests |
— |
— |
(1) |
(1) |
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Net income from continuing operations attributable to TD |
209 |
101 |
680 |
652 |
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Less: Special dividends declared or paid on participating |
— |
— |
(73) |
(185) |
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(Loss) income from discontinued operations, net of tax |
— |
(19) |
— |
47 |
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Net income applicable to |
$ |
209 |
$ |
82 |
$ |
607 |
$ |
514 |
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Weighted-average shares outstanding under the two- |
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Weighted-average common shares outstanding |
55.1 |
54.3 |
54.8 |
53.9 |
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Vested options deemed participating securities |
3.3 |
3.0 |
3.6 |
3.4 |
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Total shares for basic and diluted earnings per share |
58.4 |
57.3 |
58.4 |
57.3 |
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Earnings per share from continuing operations—basic and |
$ |
3.58 |
$ |
1.76 |
$ |
10.41 |
$ |
8.14 |
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(Loss) Earnings per share from discontinued operations— |
— |
(0.33) |
— |
0.82 |
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Earnings per share |
$ |
3.58 |
$ |
1.43 |
$ |
10.41 |
$ |
8.96 |
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Adjusted Earnings Per Share |
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Income from continuing operations |
$ |
209 |
$ |
101 |
$ |
681 |
$ |
653 |
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Gross adjustments to EBITDA |
23 |
84 |
162 |
226 |
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Purchase accounting backlog amortization |
4 |
12 |
11 |
53 |
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Tax adjustment (1) |
12 |
(31) |
(146) |
(103) |
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Adjusted net income |
$ |
248 |
$ |
166 |
$ |
708 |
$ |
829 |
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Adjusted diluted earnings per share under the two-class |
$ |
4.25 |
$ |
2.89 |
$ |
12.13 |
$ |
14.47 |
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Diluted Earnings Per Share to Adjusted Earnings Per |
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Diluted earnings per share from continuing operations |
$ |
3.58 |
$ |
1.76 |
$ |
10.41 |
$ |
8.14 |
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Adjustments to diluted earnings per share: |
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Inclusion of the dividend and dividend equivalent |
— |
— |
1.24 |
3.22 |
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Acquisition and divestiture transaction-related expenses |
0.15 |
0.42 |
0.49 |
1.20 |
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Non-cash stock compensation expense |
0.32 |
0.57 |
1.76 |
1.32 |
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Refinancing costs |
0.01 |
0.02 |
0.51 |
0.40 |
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Tax adjustment on income from continuing operations |
0.32 |
(0.48) |
(1.90) |
(0.89) |
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COVID-19 pandemic restructuring costs |
— |
0.39 |
0.54 |
0.76 |
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Gain on sale of businesses, net |
— |
— |
(0.94) |
— |
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Other, net |
(0.13) |
0.21 |
0.02 |
0.32 |
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Adjusted earnings per share |
$ |
4.25 |
$ |
2.89 |
$ |
12.13 |
$ |
14.47 |
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(1) For the thirteen week periods and fiscal years ended |
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SUPPLEMENTAL INFORMATION - RECONCILIATION OF |
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PROVIDED BY OPERATING ACTIVITIES TO EBITDA, |
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EBITDA AS DEFINED |
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FOR THE FISCAL YEARS ENDED |
Table 4 |
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(Amounts in millions) |
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(Unaudited) |
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Fiscal Years Ended |
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|
|
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Net cash provided by operating activities |
$ |
913 |
$ |
1,213 |
||||
Adjustments: |
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Changes in assets and liabilities, net of effects from acquisitions and |
97 |
(168) |
||||||
Interest expense, net (1) |
1,059 |
1,029 |
||||||
Income tax (benefit) provision - current |
— |
63 |
||||||
Loss contract amortization |
55 |
36 |
||||||
Non-cash stock compensation expense (2) |
(129) |
(93) |
||||||
Refinancing costs (3) |
(37) |
(28) |
||||||
Gain on sale of businesses, net (4) |
69 |
— |
||||||
EBITDA |
2,027 |
2,052 |
||||||
Adjustments: |
||||||||
Acquisition and divestiture transaction-related expenses and |
35 |
31 |
||||||
Non-cash stock compensation expense (2) |
129 |
93 |
||||||
Refinancing costs (3) |
37 |
28 |
||||||
COVID-19 pandemic restructuring costs (6) |
40 |
54 |
||||||
Gain on sale of businesses, net (4) |
(69) |
— |
||||||
Other, net (7) |
(10) |
20 |
||||||
EBITDA As Defined |
$ |
2,189 |
$ |
2,278 |
(1) Represents interest expense excluding the amortization of debt issue costs and premium and discount on debt. |
(2) Represents the compensation expense recognized by |
(3) Represents costs expensed related to debt financing activities, including new issuances, extinguishments, refinancings and amendments to existing agreements. |
(4) Represents the net gain on completed divestitures. |
(5) Represents accounting adjustments to inventory associated with acquisitions of businesses and product lines that were charged to cost of sales when inventory was sold; costs incurred to integrate acquired businesses and product lines into |
(6) Represents restructuring costs related to the Company's cost reduction measures in response to the COVID-19 pandemic for the fiscal years ended |
(7) Primarily represents the gain on insurance proceeds from the |
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SUPPLEMENTAL INFORMATION - BALANCE SHEET DATA |
Table 5 |
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(Amounts in millions) |
||||||||
(Unaudited) |
||||||||
|
|
|||||||
Cash and cash equivalents |
$ |
4,787 |
$ |
4,717 |
||||
Trade accounts receivable - net |
791 |
720 |
||||||
Inventories - net |
1,185 |
1,283 |
||||||
Current portion of long-term debt |
277 |
276 |
||||||
Short-term borrowings-trade receivable securitization facility |
349 |
349 |
||||||
Accounts payable |
227 |
218 |
||||||
Accrued and other current liabilities |
810 |
773 |
||||||
Long-term debt |
19,372 |
19,384 |
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|
(2,916) |
(3,972) |
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