TransDigm Group Incorporated (NYSE:TDG) Q4 2019 Earnings Conference Call - Final Transcript

Nov 19, 2019 • 11:00 am ET

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TransDigm Group Incorporated (NYSE:TDG) Q4 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions]. Please standby, while we compile the Q&A roster. And our first question is from Myles Walton with UBS. Please go ahead.

Analyst
Myles Walton

Thanks so much. Good morning.

Executive
Kevin Stein

Good morning.

Analyst
Myles Walton

Kevin, I was wondering if you can -- maybe Nick just tee us off, I know you didn't want touch on the precision of the deals that may or may not be in the pipeline. But just as you look at how open the debt markets have been to you, is it fair to think that you will have excess liquidity relative to your pipeline that would point you more towards additional special dividends? Or do you think the pipeline is rich enough to satisfy, as open as the debt markets are key right now?

Executive
W. Nicholas Howley

Yeah, I don't -- mean obviously I know how the question goes. I don't want to comment on that. I think as you know, if we have $4 billion at the end of the year, we won't sit on that. I mean, will do -- we'll do -- either we will have something significant in the gunsight, or we'll do something else. As you know, I think some type of -- return some to the shareholders. And we're just, we're going to delay that decision a little bit.

Analyst
Myles Walton

Fair enough. And then Mike or Kevin, I don't know which, but on the free cash flow fiscal '18 -- sorry fiscal '19 came in a little light of fiscal '18. I think you're looking for it to be as good, if not better, I don't know if that's the divested properties. And then also, can you give a comment on your expectation for free cash for 2020?

Executive
Kevin Stein

Yeah, it was a little bit light in FY '19 and that's mainly as a result of about $100 million of cash charges on Esterline, one-time items and related to the integration. With regard to FY '20, the way we look at it generally is that, we expect EBITDA less CapEx, less cash interest, less cash taxes to be about 50% of EBITDA. I think we've mentioned the 50% to you guys historically. If you looked at FY '19 and stripped out the Esterline stuff, we hit about 50% and we expect FY '20 to be about the same.

Analyst
Myles Walton

Okay, all right, thanks. I'll leave it here. Thank you.

Operator
Operator

Thank you. Our next question comes from Ronald Epstein with Bank of America. Please go ahead.

Analyst
Ronald Epstein

Yeah, good morning.

Executive
Kevin Stein

Good morning, Ron.

Analyst
Ronald Epstein

When you think about potentially deploying some of that capital, are there areas in the portfolio that you think you need more coverage of? I mean is there any clue you can give us and if you were to do some more M&A, what area would you be covering?

Executive
Kevin Stein

Yeah, I would say our are what we are looking for is the same thing we're always looking for. Proprietary aerospace businesses with significant aftermarket content. We're not biased towards one part of an airplane or another part of the