TransDigm Group Q4 Profit Tops View, But Sales Miss; Sees FY17 Below View

(RTTNews) - TransDigm Group Inc. (TDG), a global designer, producer and supplier of highly engineered aircraft components, net income for the fourth quarter ended September 30, 2016 rose to $154.7 million, or $2.77 per share, from $141.7 million, or $2.50 per share, in the comparable quarter a year ago. The increase in net income primarily reflected the growth in net sales described above; improvements to our operating margin resulting from the strength of our proprietary products, continued productivity efforts and favorable product mix; and lower effective tax rate. This increase was partially offset by higher interest expense.

Adjusted net income for the quarter rose 14.6% to $183.6 million or $3.29 per share, from $160.2 million, or $2.83 per share, in the comparable quarter a year ago. Analysts polled by Thomson Reuters expected the company to report earnings of $3.20 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter rose 8.1%, or $65.4 million, to $875.2 million from $809.8 million in the comparable quarter a year ago. The favorable contribution from the acquisitions of PneuDraulics, Breeze-Eastern and Data Device Corporation contributed $88.6 million of the increase, partially offset by a slight decrease in organic sales. Wall Street expected revenues of $883.01 million.

"During fiscal 2016 we once again saw a number of attractive M&A opportunities that resulted in the acquisition of three good proprietary aerospace businesses for approximately $1.4 billion in purchase price. In addition, the combination of our usual high free cash flow and attractive credit markets allowed us to return about $1.6 billion more to our shareholders in the form of approximately $200 million of share repurchases plus a $1.4 billion special dividend paid in early fiscal 2017," stated W. Nicholas Howley, TransDigm Group's Chief Executive Officer, President and Chairman.

For fiscal 2017, TransDigm expects net income to be in the range of $577 million to $593 million and earnings per share of $8.51 to $8.79 per share, adjusted earnings per share of $11.84 to $12.12 per share, and net sales are anticipated to be in the range of $3.515 billion to $3.565 billion. Wall Street currently is looking for fiscal year 2017 earnings of $12.80 per share on annual revenues of $3.59 billion.