TransDigm Beats by a Cent

TransDigm Group Incorporated (TDG - Analyst Report) reported third-quarter fiscal 2011 earnings per share from continuing operations of $1.01, above the Zacks Consensus Estimate by 1 cent and prior-year earnings of 83 cents.

TransDigm’s income in the quarter was negatively affected by acquisition-related expenses of $4.3 million and higher interest expense related to the refinancing of the company's debt structure in the first quarter of fiscal 2011.

Revenue

Net sales were $325.2 million, an rise of 51.8% year over year. Organically, sales during the quarter increased by approximately 13.2%, driven by improved commercial aftermarket and OEM markets, partially offset by a slight decline in defense sales. Sales during the quarter were also aided by acquisitions of Semco Instruments, McKechnie Aerospace and Talley Actuation.

Income & Expenses

Income from operations for the quarter was $139.2 million compared with $95.3 million in the prior-year period. Selling and administrative expenses were $31.5 million compared with $23.3 million in the comparable quarter last year. EBITDA for the quarter jumped 52.3% to $156.7 million.

Balance Sheet & Cash Flow

Cash and cash equivalents was $549.3 million at the end of the quarter compared with $234.1 million at the end of fiscal 2010. Long-term debt was $3.1 billion and shareholders equity was $735.3 million.

Net cash from operating activities was $143.7 million compared with $155.3 million in the prior-year quarter.

Outlook

TransDigm expects total revenue for fiscal 2011 to be in the range of $1,189 million to $1,199 million, up from the prior guidance range of $1,179 million to $1,189 million.

For fiscal 2011, the company expects earnings per share to be in the range of $2.98 to $3.06, up from the prior guidance range of $2.76 to $2.91 per share. Adjusted earnings per share are expected to be in the range of $4.22 to $4.30 per share, up from the prior estimate of $3.97 to $4.12 per share.

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 - Analyst Report), Honeywell International Inc. (HON - Analyst Report) and United Technologies Corp. (UTX - Analyst Report).

We maintain a Zacks #1 Rank (short-term Strong Buy recommendation) on TransDigm.

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