TransDigm Group Reports Fiscal 2021 Second Quarter Results
Second quarter highlights include:
- Net sales of
$1,194 million , down 17.3% from$1,443 million in the prior year's quarter; - Income from continuing operations of
$105 million ; - Earnings per share from continuing operations of
$1.79 ; - EBITDA As Defined margin of 43.5%, representing sequential improvement;
- EBITDA As Defined of
$519 million ; - Adjusted earnings per share of
$2.58 ; and - Positive operating cash flow generation of
$98 million .
Fiscal 2021 financial guidance remains suspended at this time.
Quarter-to-Date Results
Net sales for the quarter declined 17.3%, or
Income from continuing operations for the quarter was
Adjusted net income for the quarter decreased 48.3% to
EBITDA for the quarter decreased 29.8% to
"The commercial aerospace industry has continued to show signs of recovery in recent months with the distribution of the COVID-19 vaccine and increasing air traffic, especially in certain domestic markets. We also saw another quarter of strong sequential improvement in our commercial bookings. These trends are encouraging and although the pace of the recovery is uncertain, we remain ready to meet the demand as it returns," stated
During the quarter,
On
Financing Activity Subsequent to the Quarter
On
Year-to-Date Results
Net sales for the twenty-six week period ended
Income from continuing operations for the twenty-six week period ended
GAAP earnings per share were reduced in fiscal 2021 and 2020 by
Adjusted net income for the twenty-six week period ended
EBITDA for the twenty-six week period ended
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 2021 Outlook
Given the considerable uncertainty around the extent and duration of business disruptions related to the COVID-19 pandemic, and how that will continue to impact operations, the Company will not provide fiscal year 2021 guidance at this time.
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 2021 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 AND TWENTY-SIX WEEK PERIODS 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 |
Twenty-Six Week Periods Ended |
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|
|
|
|
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|
$ |
1,194 |
$ |
1,443 |
$ |
2,301 |
$ |
2,908 |
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COST OF SALES |
602 |
625 |
1,169 |
1,288 |
||||||||||||
GROSS PROFIT |
592 |
818 |
1,132 |
1,620 |
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SELLING AND ADMINISTRATIVE EXPENSES |
162 |
180 |
358 |
381 |
||||||||||||
AMORTIZATION OF INTANGIBLE ASSETS |
36 |
46 |
65 |
86 |
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INCOME FROM OPERATIONS |
394 |
592 |
709 |
1,153 |
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INTEREST EXPENSE—NET |
268 |
252 |
535 |
501 |
||||||||||||
REFINANCING COSTS |
24 |
3 |
24 |
26 |
||||||||||||
OTHER INCOME |
(28) |
— |
(33) |
(3) |
||||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
130 |
337 |
183 |
629 |
||||||||||||
INCOME TAX PROVISION |
25 |
14 |
28 |
73 |
||||||||||||
INCOME FROM CONTINUING OPERATIONS |
105 |
323 |
155 |
556 |
||||||||||||
(LOSS) INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX |
— |
(4) |
— |
68 |
||||||||||||
NET INCOME |
105 |
319 |
155 |
624 |
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LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS |
(1) |
— |
(1) |
(1) |
||||||||||||
NET INCOME ATTRIBUTABLE TO TD GROUP |
$ |
104 |
$ |
319 |
$ |
154 |
$ |
623 |
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NET INCOME APPLICABLE TO TD GROUP COMMON STOCKHOLDERS |
$ |
104 |
$ |
319 |
$ |
81 |
$ |
438 |
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Earnings per share attributable to |
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Earnings per share from continuing operations—basic and diluted |
$ |
1.79 |
$ |
5.63 |
$ |
1.40 |
$ |
6.45 |
||||||||
(Loss) Earnings per share from discontinued operations—basic and diluted |
— |
(0.07) |
— |
1.18 |
||||||||||||
Earnings per share |
$ |
1.79 |
$ |
5.56 |
$ |
1.40 |
$ |
7.63 |
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Cash dividends paid per common share |
$ |
— |
$ |
— |
$ |
— |
$ |
32.50 |
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Weighted-average shares outstanding: |
||||||||||||||||
Basic and diluted |
58.4 |
57.4 |
58.4 |
57.4 |
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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 AND TWENTY-SIX WEEK PERIODS 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 |
Twenty-Six Week Periods Ended |
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|
|
|
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Income from continuing operations |
$ |
105 |
$ |
323 |
$ |
155 |
$ |
556 |
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Adjustments: |
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Depreciation and amortization expense |
66 |
72 |
124 |
141 |
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Interest expense, net |
268 |
252 |
535 |
501 |
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Income tax provision |
25 |
14 |
28 |
73 |
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EBITDA |
464 |
661 |
842 |
1,271 |
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Adjustments: |
||||||||||||||||
Acquisition-related expenses and adjustments (1) |
16 |
9 |
19 |
16 |
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Non-cash stock compensation expense (2) |
21 |
11 |
70 |
37 |
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Refinancing costs (3) |
24 |
3 |
24 |
26 |
||||||||||||
COVID-19 pandemic restructuring costs (4) |
18 |
1 |
39 |
1 |
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Other, net (5) |
(24) |
(10) |
(1) |
5 |
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Gross Adjustments to EBITDA |
55 |
14 |
151 |
85 |
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EBITDA As Defined |
$ |
519 |
$ |
675 |
$ |
993 |
$ |
1,356 |
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EBITDA As Defined, Margin (6) |
43.5 |
% |
46.8 |
% |
43.2 |
% |
46.6 |
% |
(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) |
Primarily represents the gain on insurance proceeds from the |
(6) |
The EBITDA As Defined margin represents the amount of EBITDA As Defined as a percentage of 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 AND TWENTY-SIX WEEK PERIODS 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 |
Twenty-Six Week Periods Ended |
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|
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Reported Earnings Per Share |
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Income from continuing operations |
$ |
105 |
$ |
323 |
$ |
155 |
$ |
556 |
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Less: Net income attributable to noncontrolling interests |
(1) |
— |
(1) |
(1) |
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Net income from continuing operations attributable to |
104 |
323 |
154 |
555 |
|||||||||||||
Less: Special dividends declared or paid on participating securities, including dividend equivalent payments |
— |
— |
(73) |
(185) |
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(Loss) income from discontinued operations, net of tax |
— |
(4) |
— |
68 |
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Net income applicable to |
$ |
104 |
$ |
319 |
$ |
81 |
$ |
438 |
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Weighted-average shares outstanding under the two-class method |
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Weighted-average common shares outstanding |
54.8 |
53.8 |
54.7 |
53.7 |
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Vested options deemed participating securities |
3.6 |
3.6 |
3.7 |
3.7 |
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Total shares for basic and diluted earnings per share |
58.4 |
57.4 |
58.4 |
57.4 |
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Earnings per share from continuing operations—basic and diluted |
$ |
1.79 |
$ |
5.63 |
$ |
1.40 |
$ |
6.45 |
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(Loss) Earnings per share from discontinued operations—basic and diluted |
— |
(0.07) |
— |
1.18 |
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Earnings per share |
$ |
1.79 |
$ |
5.56 |
$ |
1.40 |
$ |
7.63 |
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Adjusted Earnings Per Share |
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Income from continuing operations |
$ |
105 |
$ |
323 |
$ |
155 |
$ |
556 |
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Gross adjustments to EBITDA |
55 |
14 |
151 |
85 |
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Purchase accounting backlog amortization |
4 |
16 |
4 |
28 |
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Tax adjustment (1) |
(13) |
(61) |
(44) |
(94) |
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Adjusted net income |
$ |
151 |
$ |
292 |
$ |
266 |
$ |
575 |
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Adjusted diluted earnings per share under the two-class method |
$ |
2.58 |
$ |
5.10 |
$ |
4.55 |
$ |
10.03 |
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Diluted Earnings Per Share to Adjusted Earnings Per Share |
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Diluted earnings per share from continuing operations |
$ |
1.79 |
$ |
5.63 |
$ |
1.40 |
$ |
6.45 |
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Adjustments to diluted earnings per share: |
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Inclusion of the dividend and dividend equivalent payments |
— |
— |
1.24 |
3.22 |
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Acquisition-related expenses and adjustments |
0.26 |
0.35 |
0.31 |
0.59 |
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Non-cash stock compensation expense |
0.29 |
0.16 |
0.94 |
0.50 |
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Refinancing costs |
0.32 |
0.05 |
0.32 |
0.35 |
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Change in income tax provision due to excess tax benefits on stock compensation |
(0.02) |
(0.95) |
(0.19) |
(1.19) |
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COVID-19 pandemic restructuring costs |
0.24 |
0.01 |
0.52 |
0.01 |
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Other, net |
(0.30) |
(0.15) |
0.01 |
0.10 |
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Adjusted earnings per share |
$ |
2.58 |
$ |
5.10 |
$ |
4.55 |
$ |
10.03 |
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(1) For the thirteen and twenty-six week periods 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 TWENTY-SIX WEEK PERIODS ENDED |
Table 4 |
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|
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(Amounts in millions) |
||||||||
(Unaudited) |
||||||||
Twenty-Six Week Periods Ended |
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|
|
|||||||
Net cash provided by operating activities |
$ |
372 |
$ |
594 |
||||
Adjustments: |
||||||||
Changes in assets and liabilities, net of effects from acquisitions of businesses |
(9) |
148 |
||||||
Interest expense, net (1) |
518 |
485 |
||||||
Income tax provision - current |
28 |
82 |
||||||
Loss contract amortization |
27 |
25 |
||||||
Non-cash stock compensation expense (2) |
(70) |
(37) |
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Refinancing costs (3) |
(24) |
(26) |
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EBITDA |
842 |
1,271 |
||||||
Adjustments: |
||||||||
Acquisition-related expenses and adjustments (4) |
19 |
16 |
||||||
Non-cash stock compensation expense (2) |
70 |
37 |
||||||
Refinancing costs (3) |
24 |
26 |
||||||
COVID-19 pandemic restructuring costs (5) |
39 |
1 |
||||||
Other, net (6) |
(1) |
5 |
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EBITDA As Defined |
$ |
993 |
$ |
1,356 |
(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 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 |
(5) Represents restructuring costs related to the Company's cost reduction measures in response to the COVID-19 pandemic ( |
(6) 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 |
$ |
4,072 |
$ |
4,717 |
||||
Trade accounts receivable - net |
682 |
720 |
||||||
Inventories - net |
1,240 |
1,283 |
||||||
Current portion of long-term debt |
276 |
276 |
||||||
Short-term borrowings-trade receivable securitization facility |
350 |
349 |
||||||
Accounts payable |
214 |
218 |
||||||
Accrued current liabilities |
740 |
773 |
||||||
Long-term debt |
19,402 |
19,384 |
||||||
|
(3,528) |
(3,972) |
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