UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 22, 2017
TransDigm Group Incorporated
(Exact name of registrant as specified in its charter)
Delaware | 001-32833 | 41-2101738 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
1301 East 9th Street, Suite 3000, Cleveland, Ohio | 44114 | |
(Address of principal executive offices) | (Zip Code) | |
(216) 706-2960
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrants’ under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 7.01. | Regulation FD Disclosure. |
TransDigm Group Inc. ("the Company") has prepared presentation materials (the "Presentation Materials") that it intends to use on or after May 22, 2017 in presentations to current and/or potential investors in connection with customary investor meetings. The Presentation Materials are furnished as Exhibit 99.1 to this Current Report on Form 8-K and are incorporated herein by reference. The Presentation Materials are also posted in the Investor Relations section of the Company's website, www.transdigm.com.
The information in this Current Report on Form 8-K and in the Presentation Materials shall not be deemed "filed" for purposes of Section 18 of the Exchange Act of 1934, nor shall it be deemed incorporated by reference in filings under the Securities Act.
The Presentation Materials contain certain non-GAAP financial information. The reconciliation of such non-GAAP financial information to GAAP financial measures is included in the Presentation Materials. Further, the Presentation Materials contain statements intended as "forward-looking statements," all of which are subject to the cautionary statement about forward-looking statements set forth therein.
Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits
The following exhibit is being filed with this Current Report on Form 8-K:
99.1 | Investor Presentation. | |||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
TRANSDIGM GROUP INCORPORATED | ||
By | /s/ Terrance Paradie | |
Terrance Paradie | ||
Executive Vice President and Chief Financial Officer | ||
Date: May 22, 2017
Exhibit Index
Exhibit No. | Description | ||||
99.1 | Investor Presentation. | ||||
May 2017
TransDigm
Non-Deal Roadshow
Exhibit 99.1
Agenda
1
TransDigm Overview Nick Howley
Chairman and CEO
TransDigm Organic Growth & Outlook Nick Howley
Chairman and CEO
Consistent Operating Model & Customer Value Kevin Stein
President and COO
Financial Topics Terrry Paradie
Executive Vice President and
CFO
Q&A
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 expectations and beliefs, as well as a number of assumptions concerning future events, many of which are outside of our
control. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those
expressed or implied in the forward-looking statement. These risks and uncertainties include but are not limited to: the sensitivity of
our business to the number of flight hours that our customers’ planes spend aloft and our customers’ profitability, both of which are
affected by general economic conditions; future terrorist attacks; cyber-security threats and natural disasters; our reliance on
certain customers; the U.S. defense budget and risks associated with being a government supplier; failure to maintain government
or industry approvals; failure to complete or successfully integrate acquisitions; our substantial indebtedness; potential
environmental liabilities; increases in costs that cannot be recovered in product pricing; risks associated with our international sales
and operations; and other factors. Further information regarding the important factors that could cause actual results to differ
materially from projected results can be found in TransDigm Group’s Annual Report on Form 10-K and other reports that TransDigm
Group or its subsidiaries have filed with the Securities and Exchange Commission.
You are cautioned not to place undue reliance on our forward-looking statements. TransDigm Group Incorporated assumes no
obligation to, and expressly disclaims any obligation to, update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
2
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 and does not
purport to present TransDigm's actual results of operations or financial condition had the transactions reflected in such pro forma
financial information occurred at the beginning of the relevant period, in the case of income statement information, or at the end of
such period, in the case of balance sheet information, nor is it necessarily indicative of the results of operations that may be
achieved in the future.
This presentation also sets forth certain non-GAAP financial measures. A presentation of the most directly comparable GAAP
measures and a reconciliation to such measures are set forth in the appendix.
3
“Private Equity-Like Growth in Value
with Liquidity of a Public Market”
+ 15% - 20% / Year on Average
4
Shareholder’s Value Proposition
Unique & Consistent Business Strategy
Private & Public
5
Proprietary Aerospace Products with Significant Aftermarket
3-Part Value-Based Operating Strategy
Decentralized, Organization / Aligned with Shareholders
Focused Disciplined Acquisition Strategy
“Private Equity-Like” Capital Structure & Culture
TransDigm’s Consistent Goal – “Private Equity-Like” Returns to Shareholders
Company Overview
6
FY 2017
FY 2015 FY 2016
Guidance
Mid-point (2)
Revenue 2,707$ 3,171$ 3,550$
EBITDA as Defined (1) 1,234$ 1,495$ 1,703$
EBITDA as Defined margin 46% 47% 48%
Formed 1993
($ in millions)
Enterprise Value (3) ≈ $24 Billion
(1) EBITDA as Defined is a non-GAAP financial measure. For a historical reconciliation of EBITDA as Defined to Net Income, please see the appendix.
(2) Revenue and EBITDA As Defined information under FY17 Guidance Mid-point reflects the mid-point of the range for the fiscal year ending 9/30/17 that
was issued on 5/09/17. The Company only updates guidance quarterly and this presentation does not confirm or update guidance now.
(3) Enterprise value calculated as of 4/01/17 equals equity value (shares outstanding as of 4/01/17 multiplied by the TDG closing stock price on 5/15/17
plus pro forma total net debt (total debt less cash)).
Business Snapshot
Diverse Products, Platforms and Markets
7
EBITDA as Defined and Margin Revenue
Consistent Record of Growth and Margin Expansion
Note: EBITDA as Defined is a non-GAAP financial measure. See the appendix for a historical reconciliation of EBITDA as Defined to Net Income.
(1) Revenue and EBITDA As Defined information under FY17 Guidance Mid-point reflects the mid-point of the range for the fiscal year ending
9/30/17 that was issued on 5/09/17. The Company only updates guidance quarterly and this presentation does not confirm or update
guidance now.
($ in millions)
$48 $52 $57 $63 $78
$111 $131
$151
$201
$249
$293 $301
$374
$435
$593
$714
$762
$828
$1,206
$1,700
$1,924
$2,373
$2,707
$3,171
$3,550
1
9
9
3
1
9
9
4
1
9
9
5
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
2
0
1
6
2
0
1
7
E
($ in millions)
$10 $10 $13 $17 $25
$44 $51 $54
$72
$98
$124 $139
$164
$194
$275
$333
$375
$412
$590
$809
$900
$1,073
$1,234
$1,495
$1,703
1
9
9
3
1
9
9
4
1
9
9
5
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
2
0
1
6
2
0
1
7
E
8
(1)
(1)
% of Revenue
20% 19% 23% 27% 31% 39% 39% 36% 36% 39% 42% 46% 44% 45% 46% 47% 49% 50% 49% 48% 47% 45% 46% 47% 48%
Recurring Stream of Profitable Aftermarket Revenue
9
5 10 15 20 25 30 35 40 45 50 55 60 65 70
Profitability %
Airframe Program Life Cycle (Years)
Aftermarket
OE Production
Sole Source Revenue Proprietary Revenue
Significant Proprietary and Sole Source Revenue Base
Proprietary
~90%
Non-
proprietary
~10%
Note: Based on management estimates of pro forma TransDigm sales for the fiscal year ended 9/30/16. Please see the Special Notice
Regarding Pro Forma and Non-GAAP Information.
Sole source
~80%
Non-sole
source
~20%
10
Results in strong market positions and a stable,
recurring revenue stream
11
Proven Operating Strategy
Profitable
New
Business
Productivity
and Cost
Improvements
Value Based
Pricing
3 Value Drivers
1993 – 2006 2006 – 2010 2011 – 2012
Adel
Aeroproducts
Wiggins
Controlex
Marathon
Adams Rite Aerospace
Christie
Champion
Honeywell Lube Pump
Fuelcom
Norco
Avionic Instruments
Skurka
Fluid Regulators
Eaton Motors
Hartwell
Electromech
Tyee
TAC
Linread
Valley-Todeco
AQS
Talley Actuation
Schneller
Harco
AmSafe Passenger
Restraints
AmSafe Commercial
Products
AmSafe Cargo Restraints
& Specialty Devises
Aero-Instruments
2013 - 2017
Sweeney
Electra-Motion
CDA InterCorp.
Avtech
ADS/Transicoil
Bruce
CEF
Unison/GE
APC/GE
Acme
Woodward HRT
Dukes
Semco
Privately Held NYSE
TransDigm has acquired ≈ 60 businesses since 1993,
including ≈ 45 since its IPO.
(1)
(1) Divested in Q2 and Q3 of FY2011.
(1)
(1)
Proven Record of Acquisition & Integration
Beams
Aerosonic
Arkwin
Whippany Actuation
Airborne Systems – North
America
Airborne Systems –
Europe
Elektro-Metall Export
Telair International
AAR Cargo Systems
Nordisk Aviation
Franke Aquarotter
Pexco
PneuDraulics
Breeze-Eastern
DDC
Young & Franklin (Tactair)
Schroth
M
c
K
e
c
h
n
ie
A
m
S
a
fe
T
e
la
ir
12
13
Steady Long Term Growth in Stock Value
0%
5%
10%
15%
20%
25%
30%
35%
10YR (2006-2016) 5YR (2011-2016)
CAG
R
Dividends
Stock Price
(1) 10 year return reflects beginning 3/15/2006 opening stock price of $23.95, ending 12/30/2016 closing stock price of $248.96 and $91.50 of dividends paid.
(2) 5 year return reflects beginning 9/30/2011 closing stock price of $81.67, ending 12/30/2016 closing stock price of $248.96 and $83.85 of dividends paid.
≈ 30% CAGR
Last 10 Yrs (1)
≈ 32% CAGR
Last 5 Yrs (2)
TDG Organic Growth & Outlook
Definition of Acronyms:
LSD = Low Single-Digit Percent Growth
MSD = Mid Single-Digit Percent Growth
HSD = High Single-Digit Percent Growth
LDD = Low Double-Digit Percent Growth
14
TDG Unit Volume Growth vs. Peers
(excluding price) – 5/6 Years
15
(1) 5/6 yr average of proforma, or “same store” sales for the period FY 2011 thru FY 2016
(2) 5/6 yr average of “real growth” excluding estimated price for the period 2011 thru 2016
(3) Includes General Aviation and other
Exceeds Peers
About Flat
Market Performance
≈ % TDG
Sales
CAGR CAGR TDG vs.
Market Peers (2) TDG (1)
Commercial Aftermarket
40% Flat Up LSD %
Crane
Heico
Honeywell
Meggitt
Rockwell Collins
UTAS
Commercial Transport OEM
20% Up HSD % Up HSD % to LDD%
Boeing
Airbus
Business Jet/ Helicopter OEM
10%
Down LSD to
MSD %
Up MSD % (3)
Textron
Gulfstream
Bombardier
General Dynamics
Defense
30% Down MSD % Flat to Slightly Down %
Boeing Defense
Airbus Defense
Lockheed
Raytheon
Northrop Grumman
General Dynamics
Weighted Market 100% About Flat Up LSD %
Commercial Aftermarket Trends
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Global Long-Term Avg Annual Growth (RPM's) Installed Base Avg Annual Long-Term Growth
Peer Group Growth Rolling 4Qtr (%) TransDigm Growth Rolling 4Qtr (%)
(1)
(1)
Sources:
Peer Group: component parts growth rate from Canaccord Genuity (average of Crane CAM, HEICO FSG, Honeywell CAM, Meggitt CAM, ROC CAM, UTC CAM)
RPM growth and installed base as reported by Airline Monitor
6 Yr Avg 5 Yr Avg
TDG 9.1% 6.6%
Peer Group 6.6% 4.1%
Commercial Aftermarket Growth
(1) Peer group reported as of 5/15/17. Meggitt CAM and HEICO FSG Include estimate for March 2017 results based on prior quarter.
16
17
Commercial Aftermarket Theories
PMA
Out of Warranty Fleet Surplus Parts
Parts Pooling/Inventory
TDG PMA “SKU’s”
End Item – PMA: 1
Actually Sold: 20
(we use this #)
(1) Saleable Parts, Subassemblies on Component Maintenance Manual (CMM) Illustrated Parts List (IPL)
Possibly Sell (1): 50+
18
Example:
TDG PMA SKU’s– Growing Substantially
≈20,000
Total PMA’s Over 400,000 (1)
Active PMA’s Over 300,000 (2)
≈130
Compared to
(1) Total PMA – assemblies, parts and sub-assemblies currently on FAA site or approved waiting to be listed – adjusted to reflect Components Maintenance Manual components.
(2) Total PMA & part numbers that sell w/some regularity.
Average New TDG PMAs / Yr - Last 5 years
Average of New 3rd Party PMAs on TDG Parts
/ Yr - Last 5 years
19
TDG 3rd Party PMA – Below Market % & Declining
20
PMA Market Penetration
3rd Party PMA
Less than 2%
3rd Party PMA
≈ 2 ½% to 3%
Total TDG Commercial
Aftermarket $
Total Industry Commercial
Aftermarket $
Surplus Parts Minimal TDG Impact
21
Source: Management Analysis
10% Surplus
Below 2% Surplus
Surplus Sales Market Penetration
TDG Below Market % (1) Industry
22
0
200
400
600
800
1000
1200
1400
1600
1800
Commercial Transport – Total Deliveries
55 Year History
4 years
6 years
Commercial Transport Extended Production Cycle =
Lower Aftermarket Growth
4 years
7 years
14 years +
Source: Airline Monitor
Over 5 YR Aircraft – Slower Fleet Growth &
Lower Utilization
23
0
2
4
6
8
10
12
Hours / Day by Age
0%
1%
2%
3%
4%
5%
6%
7%
8%
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
2
0
1
6
2
0
1
7
2
0
1
8
2
0
1
9
% / Yr Growth
2.8%
(1) Source: UBS Research
Over 5 Yr Old Fleet Growth (1) Over 5 Yr Old Daily Utilization (1)
5 Yrs & Less Over 5 Yrs
Freight Market – About Flat
24
-30%
-20%
-10%
0%
10%
20%
30%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
W
orld
w
id
e
a
ir
c
a
rgo
traf
fi
c
(
y
ou
gro
w
th
)
FedEx UPS
(1) Source: Goldman Sachs Research and Bureau of Transportation Statistics (December 2016)
FedEx and UPS Global Air Cargo Traffic (1)
TDG Commercial Aftermarket Unit Growth
Last 5/6 Yrs
25 (1) Last 5/6 yrs; Last 3 yrs similar
(Unit Growth (w/o price))
RPMs Not Primary Driver
Commercial
Aftermarket
% TDG
Commercial
Aftermarket
TDG CAGR % / YR (1) Comment
Comm Tr- Passenger 70% Up LSD to MSD % Over 5 yr fleet growth / lower
average utilization
Comm Tr - Freight 15% Down Slightly Cargo systems up slightly
Containers / nets down
Biz Jet / Heli / GA 15%
Down LSD to MSD % Biz jet roughly flat – Heli / GA
down sharply
Total 100% Up LSD %
TDG Commercial Transport OEM By Platform
26
A320
B737
B787
A350
B777
A330/340
A380
C-Series/CRJ
B747
ATR 42/72
Embraer 170/175
Bombardier – Q400/DASH-8
A350
B737 max
A320 NEO
B787
A330/340
B777x
C-Series/CRJ
A380
Bombardier Q400/Dash-8
Embraer 190/195
ATR 42/72
Higher $/Yr
Platform
Lower $/Yr
Platform
81%
75%
2016 Run Rate
(1) Constant dollars and based on current TDG estimated ship set content
Well Positioned For Growth
2021 Run Rate
2016 % Rev Model (1) 2021 % Rev Model
(1)
Prior Platforms C-SeriesPrior Platforms A350
Prior Platforms B787
Major New Business Content:
Commercial Aircraft “New Designs”
27
B787 A350 C-Series
$ / Shipset Growth Over Prior Platforms – “Same Store Basis”
Representative Products:
• Composite Components
• Audio System./Software
• Interior Thermo Plastics
• Nacelle & Other Latches
• Numerous Others
Representative Products:
• Onboard Cargo System
• Cockpit Security System
• Cabin/APU Electrical
System Interconnect
• Decorative Laminates
• Numerous Others
Representative Products:
• Air System Valving
• Nacelle & Other Latches
• Composite Components
• Decorative Laminates
• Numerous Others
+ Over 25% + ≈ 2X + ≈ 2X
Prior Platforms A320neo
+ LDD %
Prior Platforms B737max
+ LSD/MSD %
Prior Platforms B777X
+ HSD/LDD %
Modest Design Change = Modest Content
Change
28
B777X* A320neo
$ / Shipset Growth Over Prior Platforms – “Same Store Basis”
B737Max
Representative Products:
• Composite Components
• Communication Management
Boards/Software
• Fuselage Latches
• Flight Control Actuators
• Numerous Others
Representative Products:
• Flight Control Valving
• Cargo Loading System
• Structural Rods
• Nacelle/Fuselage Latches
• Numerous Others
Representative Products:
• Nacelle/Fuselage Latches
• Audio Control Panel
• Interior Thermo Plastics
• Fuel Line Connectors
• Numerous Others
*Still in Progress
TDG Defense OEM By Platform
29
Higher $/Yr
Platform
Lower $/Yr
Platform
63% 63%
2016 Run Rate 2021 Run Rate
2016 % Rev Model (3) 2021 % Rev Model
(3)
Parachutes (1)
A400M
UH60/Blackhawk (2)
C-130
S-92
CH-47
F35 (JSF)
AH-64 – Apache
KC 46/767
V-22
F-18
CN 235/295
Parachutes (1)
A400 M
F-35 (JSF)
UH-60 (2)
C-130
S-92
AH64-Apache
CH-47
KC-46 /767
P8/737
T-50
(1) Cargo & Personnel
(2) Includes various derivatives
(3) Constant dollars and based on TDG estimated current ship set content
New Defense Platforms – New Designs –
“Same Store Basis”
30
JSF A400M KC46 (767)
Representative Products:
• Hydraulic Actuators/Valves
• Engine Clamps
• Data Management Processing
Boards/Software
• Electric Motors
• Numerous Others
Representative Products:
• Refueling Connectors
• Main Deck Barrier Nets
• Flight Control Actuators
• Ram Air Actuator
• Numerous Others
Prior Platforms JSF Prior Platforms A400M Prior Platforms KC46 (767)
Representative Products:
• Cargo Loading System
• Composite Components
• Winch/Retrieval System
• Main Barrier Nets
• Numerous Others
+ ≈ 3X + MSD % + ≈ 2X
5 YR- Go Forward Market Estimates - CAGR
(Unit Growth – w/o Price)
31
Commercial Aftermarket Up LSD % Up LSD to MSD %
Gradual Recovery
Commercial Transport OEM Up HSD to LDD % Up LSD %
Business Jet / Helicopter OEM* Up LSD % Up LSD to MSD %
Defense Slightly Down Up LSD %
Last 5 Years TDG
% Unit Growth / Yr
Next 5 Years TDG
% Unit Growth / Yr
Vs. Last
5 Years
Potentially Richer Mix
*Includes General Aviation and other
5 Yr Go Forward Estimated Growth (wo/ACQ) % / Yr
0%
3%
6%
9%
12%
Revenue EBITDA
G
ro
w
th
%
/Y
R
range
32
range
(1) Based on market assumptions listed on slide 31. Assuming no additional acquisitions.
TDG Estimated Organic Growth (1)
Consistent Operating Model &
Customer Value
33
Customer Value Proposition
34
Provide Reliable, Well Engineered Products &
Deliver Them On-Time
Highest Value to Customers
34
TDG Operating System: A Detailed Process
Investment
Highly Engineered Products Require Resourcing
~7% of total cost spent on Engineering
Organization
BUM Team Concept
Succession Planning
Execution
Relentless Drive to Create Value
35
TDG Organization
EVP Role Scalable With Future Growth
.................... Bob Henderson
Vice Chair
36
Business Unit Teams
Co-Located
Business Unit Manager
Engineers
Manufacturing
Quality
Purchasing/Planning
Customer Service
Run Your Business Like You Own It
KEY TAKEAWAY: Business Unit Teams – Cross
Functional, Co-Located, With a BUM Leader
37
Delivery Performance
38
“High TransDigm Customer Loyalty - Driven by On-time Delivery,
Lead Time and Broad Product Offering” – Survey Results
Note: For Illustration Only
38
39
Proven Operating Strategy
Profitable
New
Business
Productivity
and Cost
Improvements
Value Based
Pricing
3 Value Drivers
Value Generator: Productivity
TDG Cultural Elements
• Simple Focus
• Clear Expectations/Accountability
• Visible Leadership
• Bias to Action- Act Like an Owner
ACTIVE
LEADERSHIP
40
Clear Goal – Detailed Execution
41
Steady Trackable Productivity
Improvements
Across Total Cost Base
41
Sales Per Head
42
If we are PRODUCTIVE we
should be able to produce
increased volume with the
same number of people
Improved Margin
Creating Value
We don’t
compare sites.
We look for
improvement
trends.
Year 1 2 3 4 5 6
Note: For Illustration Only
Sa
les
P
er
H
ead
A
ve
ra
ge
He
ad
s
42
Detailed Cost Reduction Planning
43
Projects YTD Plan
YTD
Enacted
Plan FY Forecast
Vendor LTAs / Resourcing 525 764 700 764
Commodity Hedge 75 44 100 75
Various Purchasing Initiatives 338 444 450 550
Purchasing Savings 938 1252 1,250 1,389
Outsourcing Domestic 47 0 62 62
Offshore Mfg (in-house) 200 200 200 200
Offshore Intercompany - 0 - -
Offshore 3rd Party 19 48 25 48
Outsourcing / Offshore Savings 265 248 287 310
RIF / Plant Consolidation 1,800 1800 1,800 1,800
Compensation Reduction - 0 - -
Mfg Projects (Automation) 75 23 100 100
Other Labor Projects 38 50 50 75
Labor Savings 1,913 1873 1,950 1,975
Scrap Reduction 38 0 50 50
Assembly Projects 75 30 100 100
Eng / Quality Projects 75 187 100 225
Warranty / Rework / Repairs - 0 - -
Rent / Utility / Engery Savings 19 0 25 15
Mainten, tooling expense reduction 8 0 10 10
VIP Ideas 113 203 150 200
Other Spending Reduction 470 18 627 500
Other Spending Reduction 797 438 1,062 1,100
Total Productivity Savings 3,912 3,811 4,549 4,774
• Measure the Goals
• Schedule and Savings
• Challenge Delays
• Trust but Validate
Productivity as a % of Total Cost 3.3% 6.4% 3.8% 4.8%
Note: For Illustration Only
43
Value Generator: Price
Note: For Illustration Only
%
Price
Analysis By Market Segment
• Price to reflect value
• Detailed tracking
44
Value Generator: Profitable New Business
Note: For Illustration Only
45
Sample New Business Products In Last 12 Months
Product Lines Fresh & Well Positioned
46
Customer Value Proposition
47
Provide Reliable, Well Engineered Products &
Deliver Them On-Time
Highest Value to Customers
47
Financial Topics
48
5 Yr Go Forward Model Assumptions
(w/o Acquisitions)
49
Continued Strong Free Cash Flow Generation
Weighted Avg Interest Rate: 5% to 6%
Cash Tax Rate: 25% to 30%
Capex: ≈ 2% of Sales
Leverage & Cash on Hand: No Significant Change to
Current Strategy
Cash $985
$600m revolver – L + 3.00%
$250m AR securitization facility 200 L + 0.90%
First lien term loan C due 2020 1,222 L + 3.00%
First lien term loan D due 2021 802 L + 3.00%
First lien term loan E due 2022 1,511 L + 3.00%
First lien term loan F due 2023 2,871 L + 3.00%
Total senior secured debt $6,606 3.4x
Senior sub notes due 2020 550 5.50%
Senior sub notes due 2022 1,150 6.00%
Senior sub notes due 2024 1,200 6.50%
Senior sub notes due 2025 750 6.50%
Senior sub notes due 2026 950 6.375%
Total debt $11,206 6.2x
Actual 4/1/2017
Net Debt to Pro
Forma EBITDA As
Defined Multiple Rate
Capital Structure and Maturity Profile
Pro Forma Capitalization
($ in millions)
50
200 0
1,222
802
1,511
2,871 550
1,150
1,200
750 950
0
1,000
2,000
3,000
4,000
2017 2018 - 2019 2020 2021 2022 2023 2024 2025 2026
Secured Loans Sr. Sub Notes
Pro Forma Debt Maturity Profile
($MM)
50
Weighted Avg
Interest Rate
5.2%
Interest Rate Sensitivity Analysis
51
($ in millions)
Cash Cash Cash Cash
LIBOR % Interest Exp $ Interest Rate % Interest Exp $ Interest Rate %
Current → 1.0% 580$ 5.2% 400$ 3.6%
2% 620$ 5.6% 430$ 3.9%
4% 685$ 6.1% 470$ 4.2%
6% 740$ 6.6% 510$ 4.6%
Pre-Tax After-Tax (1)
TDG Weighted Average
(1) After tax calculations assume a 31% effective tax rate, the same rate assumed in the FY 2017 guidance.
52
($ in millions)
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Income from continuing ops. ($5) $0 $1 $3 $14 ($17) $11 $14 $31 ($76) $14 $35 $25 $89 $133 $163 $163 $152 $325 $303 $307 $447 $586
Depreciation and amortization 7 7 7 6 7 6 7 9 13 10 18 17 16 24 25 28 30 61 68 73 96 94 122
Interest expense, net 5 5 5 3 3 23 28 32 37 43 75 80 77 92 93 84 112 185 212 271 348 419 484
Income tax provision (2) - 2 5 13 (2) 8 9 17 (45) 6 23 16 53 74 88 88 77 163 146 142 189 182
Warrant put value adjustment 1 1 2 5 7 - - - - - - - - - - - - - - - - -
Extraordinary item - - - 2 - - - - - - - - - - - - - - - - - -
EBITDA, excluding discontinued 6 13 17 24 44 10 54 64 98 (68) 113 155 134 258 325 $363 $393 $475 $768 $793 $893 $1,149 $1,374
operations
Merger expense - - - - - 40 - - - 176 - - - - - - - - - - - -
Acquisition-related costs 4 - - 1 - 1 - 8 - 15 20 2 1 9 2 6 12 30 19 26 22 35 57
Non-cash compensation and
deferred compensation costs - - - - - - - - - 1 6 7 1 6 6 6 7 13 22 49 26 32 48
One-time special bonus - - - - - - - - - - - - 6 - - - - - - - - -
Public offering costs - - - - - - - - - - - - 3 2 - - - - - - - -
Refinancing costs - - - - - - - - - - - - 49 - - - - 72 - 32 132 18 16
EBITDA As Defined $10 $13 $17 $25 $44 $51 $54 $72 $98 $124 $139 $164 $194 $275 $333 $375 $412 $590 $809 $900 $1,073 $1,234 $1,495
APPENDIX: Reconciliation of EBITDA and EBITDA As Defined
to Net Income
APPENDIX: FY 2017 Guidance Mid-point GAAP to
Adj EPS Reconciliation and Assumptions
53
($ in millions)
Year Ended
September 30,
2017 (guidance
mid-point)
Net income $612
Adjustments:
Depreciation and amortization expense 140
Interest expense - net 600
Income tax provision 237
EBITDA 1,589
Adjustments:
Acquisition-related expenses and adjustments and other, net 32
Non-cash stock compensation expense 46
Refinancing costs 36
Gross Adjustments to EBITDA 114
EBITDA As Defined $1,703
EBITDA As Defined, Margin 48.00%
Earnings per share $9.28
Adjustments to earnings per share:
Inclusion of the dividend equivalent payments 1.73
Non-cash stock compensation expense 0.57
Acquisition-related expenses and adjustments and other, net 0.65
Refinancing costs 0.44
Reduction in income tax provision net income per common share
related to the adoption of ASU 2016-09
(0.46)
Adjusted earnings per share $12.21
Weighted-average shares outstanding 55.6
GAAP EPS Tax Rate 28%
Adjusted EPS Tax Rate 31%