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Transdigm Group (TDG) 1Q Earnings Drop 41.7 Pct, Yet Beat Estimates

 February 04, 2013 07:31 AM

(By Balaseshan) TransDigm Group Inc. (NYSE: TDG) reported a 41.7% drop in quarterly earnings due to dividend equivalent payments. However, results exceeded Street's expectations and the supplier of highly engineered aircraft components tightened its fiscal 2013 guidance.

Earnings for the first quarter were $36.04 million or $0.66 per share, down from $61.81 million or $1.15 per share in the same period last year. Adjusted earnings per share (EPS) rose to $1.51 from $1.42.

Net sales grew 22.1% to $430.42 million, on favorable contribution from the acquisitions of Harco, AmSafe and Aero-Instruments. Organic net sales growth was up slightly.

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Analysts, on average, polled by Thomson Reuters had expected a profit of $1.47 per share on revenue of $428.92 million for the first quarter.

Interest expense rose to $62.88 million from $49.06 million, primarily due to an increase in outstanding borrowings to partially fund the acquisition of AmSafe in February 2012 and fund the dividend paid in November 2012. The latest quarter included acquisition-related and non-cash compensation costs of $8.1 million, net of tax, or $0.15 per share.

Looking ahead into the fiscal 2013, the company narrowed its adjusted EPS guidance to range of $6.74 to $6.98 from previous forecast of $6.54 to $6.98. TDG tightened its revenue outlook to range of $1.82 billion to $1.88 billion from previous estimate of $1.80 billion to $1.90 billion. Street analysts predict EPS of $6.87 on revenue of $1.87 billion.

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"We are maintaining the mid-point of our annual sales and EBITDA As Defined guidance but are narrowing the range to reflect our current market view. In addition, we are increasing our earnings per share guidance to reflect a more favorable tax outlook, while keeping in mind our continuing caution regarding the uncertain worldwide economic and aerospace market conditions," said Nicholas Howley, TransDigm's Chief Executive Officer.

TDG closed Friday's regular session up 0.72% at $136.42. The stock has been trading between $105.35 and $152.62 for the past 52 weeks.

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