TransDigm Q1 Profit Increases, Results Beat Estimates; Raises FY14 Outlook

(RTTNews) - Engineered aircraft components maker TransDigm Group Inc. (TDG) said that its first-quarter net income increased from last year. The company raised its full year fiscal 2014 guidance primarily to reflect the recent acquisition of Airborne Systems and its first quarter performance.

Net income applicable to common stock for the first-quarter quarter rose to $81.98 million, or $1.44 per share, from $36.04 million, or $0.66 per share, in the comparable quarter a year ago. Earnings per share were reduced by $0.07 per share representing dividend equivalent payments made in the quarter compared to $0.70 per share in the comparable quarter a year ago.

Net income for the quarter rose to $86.1 million, from $74.2 million last year.

The increase in net income primarily reflected the growth in net sales partially offset by higher interest expense. The increase in interest expense was primarily due to an increase in outstanding borrowings from $4.2 billion to $5.7 billion primarily to fund the $22.00 per share dividend paid in July 2013.

Adjusted net income for the quarter increased to $94.8 million and $1.66 per share, from $82.3 million and $1.51 per share, in the comparable quarter a year ago. Analysts polled by Thomson Reuters expected the company to report earnings of $1.56 per share for the quarter. Analysts' estimates typically exclude special items.

Adjusted earnings per share increase of 9.9% was lower than the increase in adjusted net income of 15.2% as a result of higher weighted average shares of 57.0 million, up from 54.5 million in the prior year period.

Net sales for the quarter rose 23.0% to $529.3 million from $430.4 million in the comparable quarter a year ago. Thirteen analysts estimated revenues of $503.25 million for the quarter. Organic net sales grew approximately 9.1%. The favorable contribution from the acquisitions of Aerosonic, Arkwin and Whippany Actuation accounted for the balance of the increase in net sales.

As previously reported on December 19, 2013, TransDigm Group acquired Airborne Systems for approximately $250 million in cash. Airborne Systems is designer and manufacturer of military personnel parachutes, cargo aerial delivery systems, emergency escape systems, naval decoys and other related products for the defense industry.

For fiscal 2014, the company now expects net income be in the range of $375 million to $393 million, higher than $372 million to $390 million projected earlier.

Annual earnings per share are now expected to be in the range of $6.24 to $6.54 per share verse prior estimate of $6.16 to $6.48 per share.

Adjusted earnings per share for fiscal 2014 are now expected to be in the range of $7.35 to $7.65 per share, compared to earlier outlook of $7.00 to $7.32 per share.

Annual net sales guidance has been raised to a range of $2.283 billion to $2.343 billion from the previous estimate of $2.155 billion to $2.215 billion.

Street currently is looking for fiscal year 2014 earnings of $7.44 per share on annual revenues of $2.25 billion.