TransDigm Group INC Quarterly Report for Q3 Ended Jun 28, 2014

Summary

TransDigm Group Incorporated reported results for the period ending June 28, 2014, with significant changes driven by recent acquisitions and a major debt refinancing. Net sales saw a substantial increase of 25.0% year-over-year, largely attributable to acquisitions made in the past year, contributing $244.8 million in sales. While organic sales also grew by 7.3%, the company's profitability was impacted by increased interest expenses and significant refinancing costs. The company undertook a substantial refinancing effort, redeeming its $1.6 billion Senior Subordinated Notes due 2018 and issuing new notes totaling $2.35 billion (6.00% due 2022 and 6.50% due 2024). This, combined with new term loans under its credit facility, led to a significant increase in total debt. Despite revenue growth, net income declined by 11.9% year-over-year to $192.7 million, reflecting the impact of $131.5 million in refinancing costs and higher interest expenses. The company also declared and paid a special cash dividend of $25.00 per share, totaling approximately $1.32 billion.

Key Highlights

• 1Net sales increased by 25.0% to $1.73 billion for the thirty-nine week period ended June 28, 2014, driven significantly by recent acquisitions.
• 2The company incurred substantial refinancing costs of $131.5 million related to the redemption of its Senior Subordinated Notes due 2018.
• 3Total debt increased significantly, with the issuance of new Senior Subordinated Notes ($2.35 billion) and new term loans ($825 million), used in part to redeem existing notes and pay a large special dividend.
• 4Net income decreased by 11.9% to $192.7 million for the thirty-nine week period, impacted by higher interest expenses and refinancing costs.
• 5A significant special cash dividend of $25.00 per share, totaling approximately $1.32 billion, was paid to shareholders.
• 6EBITDA As Defined increased to $782.1 million, reflecting strong operational performance before financing and acquisition-related costs.
• 7The company's backlog grew to $1.29 billion, indicating strong future demand, primarily driven by acquisitions.

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