TransDigm Group Incorporated (NYSE:TDG) Q4 2019 Earnings Conference Call - Final Transcript
Nov 19, 2019 • 11:00 am ET
W. Nicholas Howley
Thanks Nick. Today, I will review our results by key market then discuss the profitability of the business for the quarter, provide fiscal 2020 guidance and then review some other operational items. As you have seen, we had a strong fourth quarter-to-end another very good year. Mike will provide more details on the financials. As Nick has said, full year revenue and EBITDA as defined were up substantially over last year, due in part to above average organic growth, as well as continued acquisition integration and performance.
Now we will review our revenues by market category. For the remainder of the call, I will provide color commentary on a pro forma basis compared to the prior year period in 2018. That is assuming we own the same mix of businesses in both periods. Please note this market analysis section excludes Esterline for fiscal '19. However, we will begin to include the former Esterline businesses in our market analysis for fiscal 2020.
In the commercial market, which makes up close to 70% of our revenue, we split our discussion into OEM and aftermarket. Our commercial OEM market revenue increased approximately 11% in both Q4 and for full year fiscal 2019 over the prior year periods. This full year OEM revenue growth exceeded our last guidance expectation of growth in the mid to high single-digit range. This growth occurred despite a limited headwind from the impact of 737 Max grounding. The 737 Max situation is one we continue to closely monitor.
Now moving on to our commercial aftermarket business discussion; total commercial aftermarket revenues grew by 9% over the prior year quarter. Total fiscal 2019 grew about 8%, in line with our full year guidance expectations of high single digit percent growth. In the quarter, growth in the commercial transport passenger and freight markets was slightly offset by a decline in the interior submarket. Repairs and retrofits for Telair International on Boeing 747 freighters and retrofit igniters for G650 business jets from Champion, were few of the strong areas for commercial aftermarket worth noting.
Overall, commercial transport fundamentals continue to remain relatively strong, although a few items bear watching. Global revenue passenger growth has decelerated slightly in the past few months, albeit growth is still near the long-term average. Additionally, cargo demand is weaker, as FTKs have declined from reaching an all-time high in 2017.
Now let me speak about our defense market, which is just over 30% of our total revenue. The defense market, which includes both OEM and aftermarket revenues was up approximately 7% over the prior year Q4. As a reminder, this quarter we began to lap tougher prior year comparisons as our defense revenue started to accelerate in Q4 of last year. Full year defense revenue grew 14%. Last year we reported strong defense bookings that we saw materialize into sales this year. This robust growth was well distributed and appears to be driven from most businesses that support defense related platforms.
Now moving to profitability;