TDG Beats Estimate, Ups Guidance

Zacks

TransDigm Group Incorporated (TDG) reported second-quarter fiscal 2012 earnings per share from continuing operations of $1.51, outpacing the Zacks Consensus Estimate of $1.30 and prior-year earnings per share of 69 cents.

Revenue

Net sales were $423.5 million, up 39.2% year over year. Organically, sales during the quarter surged approximately 14.9%, driven by increased sales in commercial OEM markets and aided by acquisitions of Schneller, Harco and Amsafe.

Income & Expenses

Income from operations for the quarter was $177.2 million compared with $113.2 million in the prior-year period. Selling and administrative expenses were $49.5 million compared with $33.2 million in the comparable quarter last year. EBITDA for the quarter jumped $192.5 million from $128.3 million.

Balance Sheet & Cash Flow

Cash and cash equivalents were $201.5 million at the end of the quarter compared with $376.2 million at the end of fiscal 2011. Long-term debt was $3.6 billion while shareholders equity was $994.9 million at the end of the quarter.

Net cash from operating activities was $164.8 million in the quarter compared with $129.2 million in the prior-year period.

Outlook

Driven by the robust performance in the second quarter, the company raised its full year 2012 guidance. TransDigm expects its total revenue for fiscal 2012 to be in the range of $1,670 million to $1,698 million, up from its prior guidance range of $1,470 million to $1,510 million. Further, earnings per share are expected to be in the range of $5.47 to $5.82, up from its prior guidance of $5.15 to $5.49. Adjusted earnings per share are expected to be in the range of $6.23 to $6.57, up from its prior guidance range of $5.66 to $6.00.

The company revised its guidance to account for the recent acquisition of AmSafe and good performance in the first half of the year. However, uncertain aerospace market and worldwide economic environment remain a matter of concern.

Based in Cleveland, Ohio, TransDigm Group Inc.designs, produces, and supplies engineered aircraft components for use on commercial and military aircraft. The company operates principally in the US. Major competitors of the company are Goodrich Corp. (:GR), Honeywell International Inc. (HON) and United Technologies Corp. (UTX).

We continue to maintain an Outperform rating on TranDigm for the long term. The company has a Zacks #1 Rank (Strong-Buy recommendation) over the next one-to-three months.

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