TransDigm Group Inc.
) reported strong second-quarter fiscal 2014 results with
adjusted earnings per share of $1.87 comfortably surpassing the
Zacks Consensus Estimate of $1.62 by 15.4%. The earnings
increased 7.5% compared with $1.74 per share reported in the
On a GAAP basis, net income increased 33.0% year over year to
$90.4 million while GAAP earnings were reported at $1.49 per
share, up from $1.25 per share in the prior-year quarter.
The quarterly results were driven by the company's strategic
acquisitions in fiscal 2013, improving commercial aftermarket and
strength in commercial aerospace as well as the continuing
improvement in the commercial original equipment manufacturing
(OEM) business. The growth in earnings was also attributable to
favorable year-over-year comparisons, as this time the company
did not incur additional costs related to the senior secured
credit facility that had been a drag on the earnings in
second-quarter 2013. However, the earnings were partially offset
by the increase in interest expense and acquisition-related costs
in the quarter.
Net sales in the quarter totaled $590.8 million, representing
a year-over-year increase of 26.9% from $465.6 million reported
in the prior-year. Organic net sales growth was up 6.1% from the
prior-year period, driven by contribution from the acquisitions
of Aerosonic, Airborne, Arkwin as well as Whippany Actuation.
Revenues also surpassed the Zacks Consensus Estimate of $585
TransDigm reported adjusted earnings before interest, taxes,
depreciation and amortization (EBITDA) of $244.4 million, up
35.6% from $180.2 million in the prior-year quarter.
EBITDA before adjustments was $263.0 million, an increase of
19.9% from $219.3 million in the prior-year quarter.
Balance Sheet and Cash Flow
Exiting the quarter, the company had cash from operating
activities of $220.5 million, while it had cash and cash
equivalents of $475.7 million. The company has a long-term debt
of $5.7 billion.
In the quarter, TransDigm acquired Elektro-Metall Export GmbH
(EME GmbH) for about $47.4 million to strengthen its presence in
the aerospace electromechanical actuators, electrical and
electromechanical components and assemblies, primarily for
commercial aircrafts, helicopters and other specialty
TransDigm expects to reap positive synergies from its recent
acquisitions and has raised its outlook for fiscal 2014 to
highlight the benefits of the EME GmbH acquisition.
TransDigm expects fiscal 2014 net sales to be in the range of
$2,317 million to $2,367 million versus the earlier range of
$2,283 million to $2,343 million.
The net income is anticipated to be in the band of $380
million - $394 million compared with the earlier guidance of
Adjusted earnings per share are expected to be in the range of
$7.46-$7.70 a share, compared with the previously projected range
of $7.35 to $7.65 per share.
Adjusted EBITDA is expected to be in the range of $1,046
million to $1,068 million, versus the previous range of $1,036
million to $1,064 million.
The company expects the GAAP earnings to be in the range of
$6.33 to $6.57 per share compared with the previously expected
range of $6.24 to $6.54 per share.
TransDigm currently holds a Zacks Rank #2 (Buy). Other stocks
that look promising include
Alliant Techsystems Inc.
B/E Aerospace Inc.
). All three have the same rank as TransDigm.
ALLIANT TECHSYS (ATK): Free Stock Analysis
B/E AEROSPACE (BEAV): Free Stock Analysis
CURTISS WRIGHT (CW): Free Stock Analysis
TRANSDIGM GROUP (TDG): Free Stock Analysis
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