TransDigm fiscal 1Q down sharply; raises outlook; restates past earns on accounting change

TransDigm 1Q earns drop sharply

CLEVELAND — Aircraft parts maker TransDigm Group Inc. said Wednesday that its fiscal first-quarter earnings dropped sharply as higher interest expenses outweighed a slight rise in sales.

The company raised its 2010 guidance based on factors such as the anticipated effects of an acquisition and a brighter market outlook.

TransDigm also said it would restate earnings going back to 2007 due to an accounting change. The company said overall net income results for that period would remain unchanged but that its earnings per share figures would be adjusted.

For the 13-week period ended Jan. 2, TransDigm reported net income of $445,000, or a penny per share. That was down from $39.6 million, or 75 cents per share in the prior-year quarter.

TransDigm’s first-quarter results were dragged down by a $5.9 million interest expense related to a debt issuance.

Sales grew 1.7 percent to $184.3 million, helped by the impact of acquisitions. But organic sales dropped 7.3 percent on lower demand from plane makers.

TransDigm’s restatement is due to the way that it accounts for the effect of stock options. Using the company’s old method of accounting, the quarterly earnings per share result was 70 cents.

Analysts polled by Thomson Reuters, who made their predictions before the company’s restatement, forecast earnings per share of 71 cents during the first quarter.

For 2010, TransDigm expects net income of $143 million to $153 million. That is higher than previous guidance of $116 million to $126 million.

The increased outlook is due partly to the December acquisition of aerospace valve maker Dukes Inc. Company officials said they remain cautious about the recovery of the global aerospace industry.

Shares of TransDigm fell 49 cents $47.86 in afternoon trading Wednesday.