TransDigm Group Incorporated (NYSE:TDG) F4Q2011 Earnings Conference Call November 17, 2011 11:00 AM ET
Executives
Liza Sabol – IR
Nick Howley – Chairman and CEO
Ray Laubenthal – President and COO
Greg Rufus – EVP and CFO
Analysts
Carter Copeland – Barclays Capital
Robert Spingarn – Credit Suisse
Joe Nadol – JPMorgan
Michael Ciarmoli – KeyBanc Capital Markets
Amit Mehrotra – Deutsche Bank
Carter Leake – BB&T Capital Markets
Eric Hugel – Stephens Incorporated
Errol Rudman – Rudman Capital
Ken Herbert – Wedbush Securities
Greg Halter – Great Lakes Review
Operator
Good day, ladies and gentlemen, and welcome to the fourth quarter 2011 TransDigm Group Incorporated earnings conference call. My name is Virginia, and I will be your conference operator for today. At this time, all participants are in a listen-only mode. Later, we will be conducting a question-and-answer session. (Operator instructions)
Today’s event is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Ms. Liza Sabol with Investor Relations. Please go ahead, Ms. Sabol.
Liza Sabol
Thank you. I would like to thank all of you that have called in today and welcome you to TransDigm's Fiscal 2011 Fourth Quarter Earnings Conference Call. With me on the call this morning are TransDigm's Chairman and Chief Executive Officer, Nick Howley; President and Chief Operating Officer, Ray Laubenthal; and our Executive Vice President and Chief Financial Officer, Greg Rufus.
A replay of today's broadcast will be available for the next two weeks. Replay information is contained in this morning's press release and on our Website at transdigm.com. We also note that our Form 10-K will be filed tomorrow and also will be found on our Website.
Before we begin, the company would like to remind you that statements made during the call, which are not historical in facts are forward-looking statements. For further information about important factors that could cause actual results to differ materially, from those expressed or implied in the forward-looking statements, please refer to the company's latest filings with the Securities and Exchange Commission. These filings are available through the Investors section of our Website or through the SEC Commission’s Website at sec.gov.
The company would also like to advise you that during the course of the call, we will be referring to EBITDA, specifically EBITDA As Defined, adjusted net income and adjusted earnings per share, all of which are non-GAAP financial measures. Please see the tables and related footnotes in the earnings release for a presentation of the most directly comparable GAAP measures and a reconciliation of EBITDA and EBITDA As Defined, adjusted income and adjusted earnings per share to those measures.
With that, let me now turn the call over to Nick.
Nick Howley
Good morning, and thanks for calling in today to hear about our company. I will start off as usual with some comments about our consistent strategy. I will then given an overview of a busy fiscal year ’11, then a summary of our financial and market performance in ’11 and lastly some initial guidance for 2012.
So, we have a fair amount to cover here today. To restate, we believe our business model is unique in the industry, both in its consistency and its ability, staying and create intrinsic shareholder value through all phases in the aerospace cycle. To summarize some of the reasons we believe this, and you can look at Page 4 of the slides now, about 90% of our net sales were generated by proprietary products, around three-quarters of our sales come from products for which we believe we are the sole source provider, about 55% of our revenue and a much higher percent of our EBITDA comes from aftermarket sales. Aftermarket revenues have historically produced a much higher gross margin and have provided relative stability in the downtimes.
Because of our uniquely high EBITDA margins, running around 50% of revenue, and relatively low capital expenditure requirements, typically 2% or less of revenue, TransDigm has year-in and year-out generated very strong free cash flow. We pay close attention to our capital structure and view it as another means to create shareholder value.
As you know we have in the past and continue to be willing to lever up opportunities or view our leverage as sub-optimum equity value creation. We typically begin to delever pretty quickly. We have a well-proven value-based operating strategy focused around what we refer to as our three value drivers
new business development; continue cost improvement; and value-based pricing.
We stick to these concepts as the core of our operating management methodologies. This consistent approach has worked for us through up and down markets and has allowed us to continuously improve and increase the intrinsic value of our businesses, while steadily investing in new business and platform positions.
We have also been successful in regularly acquiring and integrating businesses. We acquire proprietary aerospace businesses with significant aftermarket content. We have been able to acquire and approve aerospace businesses through all phases of the cycle. In fiscal year ’11 just ended, we acquired three businesses making up nine operating units for a total price of about $1.6 billion. Additionally about two weeks ago, we announced an agreement to acquire Harco Laboratories for about $84 million, this is subject still to HSR Antitrust Review.
Through our consistent focus on our operating value drivers, a very clear acquisition strategy, and close attention to our capital structure, we have been able to create intrinsic value for our shareholders for many years in up and down markets. To summarize 2011 just quickly, it was a busy, hectic, but a good year. We created a lot of shareholder value and this was far and away our most active year for acquisitions.
Now, I will give a little more color. In the first half of the year, we acquired the McKechnie business for $1.27 billion, our largest acquisition to date. McKechnie was a holding company with seven operating units. We raised $3.1 billion to both refinance our existing debt and pay for the McKechnie acquisition. We then acquired Talley Actuator business from Teleflex for about $93 million. We again refinanced the senior debt portion of our earlier financing, that was about $1.6 billion of our debt in order to drop the interest rate and to eliminate certain maintenance covenants. And lastly, we began to integrate the four major McKechnie units and the Talley businesses into TransDigm. We also have initiated three plant relocation consolidations and we sold the McKechnie Fastener businesses to Alcoa for more than we paid for them.
In the second half of the year, we initiated a fourth plant relocation. We sold the McKechnie Distribution business to Satair. Satair is a public Danish distributor of aerospace parts. We also acquired Schneller for $288 million, our third largest acquisition, and we continue the integration of the six new businesses in TransDigm. All the while, we continue to generate real intrinsic value in our new and existing business and expand our operations to meet a rising market.
As I said before, it’s a pretty busy year. Turning to our 2011 performance, I will remind you this is the fourth quarter and full-year report for our fiscal year 2011, our fiscal year ended September 30th, 2011. As I have said in the past, quarterly comparisons can be significantly impacted by difference in the OEM aftermarket mix, large orders, transient inventory fluctuations, large seasonality and other factors. But by most in measure, fiscal year ’11 was a good year for TransDigm.
Our GAAP revenues were up 54% versus the prior Q4 and 46% on a full-year basis. Pro forma revenues, that is assuming we own the same mix of businesses, was up 16% on a quarter versus fourth quarter basis, and on a full-year basis, organic growth was about 12%. Reviewing the revenues by major categories, again this on a pro forma basis versus the prior year, turn to slide 5 by the way if you are trying to track, this is assuming we own the same mix of businesses in both periods. In the commercial markets, which make up about three-quarters of our revenue, in the commercial OEM area, commercial transport OEM revenues were up about 19% in the fourth quarter versus the prior Q4 and up about 16% on a full-year basis. This pickup primarily reflects the increasing airframe correction rates.
Bookings continue to run modestly out of shipments in this sector. Q4 Business Jet OEM revenues were up about 30% versus the prior Q4 and up about 25% on a full-year basis, both versus a very depressed prior-year comps. Full-year bookings were modestly ahead of shipments. I will remind you that our Business Jet revenues in total are much lower than our commercial transport revenues.
Our commercial aftermarket revenue was up about 21% versus the prior Q4 and 23% on a full-year basis. This level of growth is likely not sustainable. On a sequential basis, our commercial aftermarket revenue was about flat. Full-year bookings ran ahead of shipments, but softened a bit in Q4, hopefully, this is in a trend that time will tell.
In the defense markets, which make up about a quarter of our revenue, we continue with the mixed picture. Revenues were up 2% on a quarter versus prior fourth quarter basis, and down about 2% on a full-year basis. Incoming orders are recently running a bit ahead of shipments. Almost 60% of our military revenues come from fixed wing or helicopter sector and freighter and tanker platforms. This 60% is close evenly split between these two categories.
We are hopeful that these two more stable categories combined with our very broad base of other platforms will partially dampen the likely military spending slowdown. A few quarters not indicative of future trends, especially in defense, but we remain quite cautious about trends in the military market. In total for the quarter and the year, our revenues were a bit better than we anticipated.
Moving on to profitability and now on a reported basis, I am going to talk primarily about our operating performance, our EBITDA As Defined. The major As-Defined adjustments for the cost associated with the large refinancings, that was about $70 million, and the acquisition-related costs and accounting resulted from the recent large acquisitions, that was about $30 million. Greg will discuss this in more detail.
Our EBITDA As Defined of about $172 million for Q4 was up almost 49% from the prior Q4. The EBITDA margin was about 50% of revenues for Q4. On a full-year basis, our EBITDA margin was just about 49%. The full-year margin was also was almost back to the pre-McKechnie acquisition levels in spite of about a 2% dilution from the acquired businesses. This rapid margin recovery is the best indicator of the progress we are making, integrating the various new operating units.
With respect to acquisitions, we continue actively looking at opportunities. There is pipeline of possibilities, mostly smaller. It seems a little lighter in the last few months, and that was before that, but this generally goes in fits and starts, so I don’t draw any conclusion from that. Our closings are always difficult to predict. We remain disciplined and focused on value creation opportunities that meet our strict criteria.
(Technical Difficulty) Now, when you will find this on slide 6. Let me start off by saying that there is considerable uncertainty in the overall economy and maybe even more so in military budgets. But we realized we need to put a stake in the sand, so here we go. For fiscal year 2012, this is our best current estimate in these uncertain times. We will adjust this guidance through the year if and when it looks appropriate.
But based on the above and assuming no additional acquisitions, in other words also excluding Harco, 2012 guidance is as follows
The midpoint of the 2012 reported revenue is $1.45 billion or up about 20% on a GAAP basis; the midpoint of the 2012 EBITDA As Defined is $715 million or up about 21% on a GAAP basis; EBITDA As Defined margins are anticipated to be close to or about 50% of revenues, this is almost back to the pre-McKechnie acquisition level; the midpoint of the EPS as adjusted is anticipated to be $5.51 a share or up about 23% versus the prior year.
2012 adjustments to EBITDA and EPS primarily reflect acquisition-related costs, non-cash compensation, and some dividend equivalency payouts. On a pro forma basis, this guidance is based on the following market assumptions. We assume that commercial transport revenue growth will be about 10% based on worldwide RPM growth in the 4% to 5% area. Due to apparent catch-up in fiscal year ’11 in inventory and towards deferred maintenance, we may see some soft quarters during the year. For Business Jet aftermarket growth, we anticipate to be in the mid-single digit percent. Again, I remind you this segment is much smaller than the commercial transport segment.
In the commercial OEM, we expect revenue growth in the mid-teen percent range, with commercial transport production rates generally as announced by Boeing and Airbus, 787 shipments in the range of 15 units in 2012 and 50 in 2013. This is all offset in part by both component inventory in the system as well as varying lead times for our products. Though not consistent across manufacturers, in total, we expect roughly comparable percent growth in our Biz Jet OEM revenues.
In the defense and military revenue, we expect to see low-single digit percent declines. We are somewhat concerned that the economy may start to fall out. If this happens, we could see an impact on commercial aftermarket orders in shipments, and if so, we will adjust our guidance accordingly. Without any additional acquisitions or capital structure activity, we expect to have about $700 million of cash and $240 million of undrawn revolver at year-end 2012, our net leverage is anticipated to be about 4.4 times EBITDA on a gross basis, and about 3.4 on a net basis at the end of 2012.
We will watch both the capital markets and the acquisition markets very closely through the year and determine when or if any capital structure activity is appropriate. In summary, 2011 was a good year. Hopefully, the economy will hold up and 2012 will be a good year also. But in any event, I am confident with our consistent value-focused strategy and our strong mix of business, we can continue to create long-term intrinsic value for our investors.
And now, let me hand this over to Ray Laubenthal, our President and Chief Operating Officer, who will just give you some quick summary items for fiscal year 2011.
Ray Laubenthal
Thanks, Nick. As Nick mentioned, in total, we had a good fourth quarter and good finish to a very busy fiscal 2011. Our operating value drivers and acquisition integrations continue to add solid value, and let me explain our 2011 and fourth quarter operational value creation a little more detail.
Again, this was a big year operationally. The rising market drove underlying pickup in operational activity and on top of this market growth, we piled on our biggest acquisition year ever. We acquired nine operating units, sold off three, netted six separate new businesses. Integrating these six businesses created a fully integration of value creation activity and let me add a little color on this.
After acquiring the McKechnie businesses and the Talley Actuation products in our first quarter, we quickly went towards transitioning these businesses into the TransDigm value creation mode. As we have done with each prior acquisition, we restructured the businesses in the product line focused group and implemented our value creation metrics. We focused the engineering and new business efforts on viable and profitable new business.
We tightened up the cost structure and we applied our value-based pricing and productivity processes at each new entity. Several of these newly acquired operations were consolidated with our existing operations. Over the remainder of 2012, we physically consolidated our Avtech business, with the acquired Tyee business in Everett, Washington. The physical move is now complete and we are in the process of marketing the former Avtech buildings and property.
We also moved the Talley Actuation business across country from LA to our Aero Fluid Products group in Northeast Ohio. The electro-mech operations consolidated several Kentucky and Mexico facilities into a new expanded Mexican manufacturing facility in Matamoros, Mexico. We also consolidated our two Duke's Aerospace facilities acquired during 2010. We moved the Phoenix operations to the main Duke’s facility in Northridge, California. All of these consolidation moves will generate productivity savings as they settle and mature over the next 12 to 24 months.
Now, looking forward to 2012. Last quarter, we acquired Schneller. So far, this looks to be another good acquisition. We have just begun to transition our product line structure and metrics there. We also plan on consolidating their Florida facility with the main Kent Ohio manufacturing site. After some modest building expansion and some delay from the Cleveland winter, we expect this move will occur in next summer.
I would like to switch gears and talk about our management team. These acquisitions drove a significant number of management structure changes Our continual emphasis on succession planning and talent development paid off well for us. We are able to populate most of the key management positions with internal candidates. These proven candidates are steeped in our value-focused culture and value creation processes.
In Q1, we promoted Bernie Iversen to Executive Vice President. Bernie has been with us since our founding, performing well in a broad range of marketing, engineering and general management positions, most recently as President of the Champion Aerospace unit. Upon its promotion, we gave Bernie the oversight of five of our existing businesses. Our two other existing Executive Vice President, Jim Riley and Bob Henderson added the newly acquired units to their responsibility. We also added five new division Presidents, four of these were internal promotions. In all those division president level, we added 13 senior operational function managers, primarily at the new units, the majority of which were also internal promotions.
We believe our succession planning and talent development system is working and we have a good pipeline of talented people exposed to our value creation methods and our defined training programs. We believe the availability of promotable internal talent and our consistent succession development process effectively complements our disciplined value creation methods and is the key to our ability to regularly acquire and integrate new businesses.
Now, let me hand it over to Greg who will review the fourth quarter and 2011 financial results in more detail.
Greg Rufus
Thanks Ray and good morning again. I hope everyone have had an opportunity to read our press release, which were issued early this morning. Nick and Ray did a very good update of our business, the markets, and what lies ahead of us.
I will focus primarily on our GAAP results for the fourth quarter compared to the prior fourth quarter, commenting on major line items with a little more color. Before I begin, please refer slide 7 for our quarterly financial results.
Fourth quarter net sales were $343 million, up $119.9 million or 53.7% from the prior year. The increased sales growth includes $89.2 million as a result of the acquisitions of Semco which we acquired late in the fourth quarter of fiscal 2010 and the McKechnie, Talley, and Schneller businesses we acquired during fiscal 2011. Aside from the robust growth from acquisitions, our organic sales growth was also very strong at 13.7% over the prior-year quarter. Each market channel contributed to this growth. $18.7 million came from commercial aftermarket sales, $6.7 million from commercial OEM, and for the fourth quarter, our organic defense sales also increased $3.9 million versus the prior-year quarter.
Reported gross profit was $193 million or 56.3% of sales. The reported gross profit margin decreased by 3 percentage points versus the prior year; however, the dilutive impact from acquisition mix was approximately the 3 margin points in the quarter, of about half was due to acquisition-related startup costs and purchase accounting adjustments to inventory and the other half due to straightforward basic acquisition mix dilution which we have continually talked about.
Selling and administrative expenses were 11.2% of sales for the quarter compared to 11.4% versus the prior year. The absolute dollars increased $13 million. The dollar increase is primarily due to incremental selling and administrative expenses related to acquisitions we have been discussing all along and higher non-cash compensation costs. Amortization of intangibles was about $9 million higher versus the prior year due to the acquisition activity during the current year.
Net interest expense was $48.7 million, an increase of $21.7 million versus the prior-year quarter. This increase was primarily due to the McKechnie acquisition, which was financed entirely by debt in the first quarter of this year. At the end of the year, the weighted average interest rate on total borrowings with outstanding was approximately 6%. Our effective tax rate was approximately 33.6% for the fiscal 2011 year compared to 34.8% for fiscal 2010. The decrease in the effective tax rate was primarily due to non-recurring adjustments to our estimated deferred state tax positions along with an increase in research and development tax credits.
Net income from continuing operations for the quarter increased $13.7 million or 27% to $64.3 million, which is 18.8% of net sales. The increase was primarily due to both organic and acquisition revenue growth, somewhat offset by higher interest expense and acquisition-related costs.
Switching to earnings per share, and again, I would like to remind you that TransDigm uses the 2-class method for calculating EPS versus the more commonly used treasury method. The 2-class method has a slightly more dilutive impact of about 3% versus the treasury method. The GAAP earnings per share from continuing operations was $1.20 per in the current quarter versus $0.96 per share in the prior-year quarter. This is an increase of 25%. Adjusted earnings per share was $1.45, an increase of 42% compared to $1.02 per share last year. This percentage of increase more closely follows the quarterly improvement of EBITDA As Defined. The adjustments to GAAP from continuing operations totaled $0.25 per share which is comprised of acquisition-related cost of $0.17 per share and non-cash compensation cost of $0.08 per share.
Income from discontinued operations of $3 million increased EPS $0.06 for a total GAAP earnings per share of $1.26 per share. The activity from discontinued ops was related to finalizing all of the tax activity from the divestitures made this year.
Now, let me take a minute to quickly summarize the fiscal year on a GAAP basis. Net sales increased by 45.7% to $1.2 billion. As we have discussed, the increase in sales was primarily from acquisitions as well as over 12% organic growth, which includes flat defense sales for the year. Reported gross profit absolute dollars increased by 39.8% to $661.2 million, but decreased as a percent of sales to 54.8% from 57.2% in fiscal 2010 as a result of the 4 percentage points of dilution from acquisitions during the year which we have discussed.
Selling and administrative expenses at 11.1% of sales in fiscal ’11 compares favorably to 11.5% of sales in fiscal 2010. Also, earlier in the year, associated with the refinancing of our debt structure in quarter one, we recorded refinancing costs of $72 million which is unique to the year. Net interest expense increased $73 million, primarily due to the McKechnie acquisition financing which occurred in December 2010.
GAAP net income of $172.1 million increased $8.7 million or 5.3% from FY 2010. Net income included $19.9 million of income from discontinued operations related to divestitures of the Fastener and the AQS business. GAAP full-year EPS under the 2-class method was $3.17 per share compared to $2.52 per share a year ago. On an adjusted basis, which primarily excludes the refinancing costs, acquisition-related costs, non-cash comp costs and dividend equivalent payments, earnings per share under the 2-class method finished the fiscal 2011 at $4.48 per share, up 33.7% from $3.35 per share a year ago.
When comparing GAAP EPS from continued ops of $2.80 per share in the current year to adjusted net income of $4.48 per share, the difference of a $1.68 is comprised of the following items
$0.90 for refinancing costs we have previously mentioned; $0.05 related to the dividend equivalent payment in the first quarter; $0.16 for non-cash compensation expense; and $0.57 for acquisition-related expenses including acquisition integration costs such as startup and acquisition expenses, inventory purchase accounting adjustments and backlog amortization.
Switching gears to cash and liquidity, the company generated $260.6 million of cash from operating activities for our cash flow statement during fiscal year 2011. We closed the year with $376 million of cash on the balance sheet. We ended the year a net cash increase of $142 million as mentioned. Although we financed McKechnie with debt, we acquired Schneller and Talley Actuation from cash on the balance sheet.
The company’s net debt leverage ratio for fiscal year 2011 was approximately 4.3 times our pro forma EBITDA As Defined. As we look forward to fiscal ’12., we estimate the midpoint of our GAAP EPS to be $5.11 and as Nick previously mentioned, we estimate the midpoint of our adjusted earnings per share to be $5.51. The $0.40 in adjustments to bridge GAAP EPS to adjusted EPS includes the following assumptions
$0.06 from dividend equivalent payments compared to $0.05 this year; $0.17 from non-cash option expense compared to $0.16 this year; and $0.17 of carry-forward activity for acquisition-related expenses from our reported acquisitions.
Some additional assumptions in 2012 guidance are
the effective tax rate will be approximately 35%; cash taxes to be slightly lower than our recorded tax expense; average interest rate is forecasted at approximately 6%. We also expect to generate an additional $325 million of cash. This would reduce our net leverage ratio to approximately 3.4 times EBITDA. These above assumptions do not include the impact of the anticipated Harco acquisition.
In summary, FY11 was a hectic but very rewarding year. The combination of continued exceptional operational performance in our core businesses, the execution of our M&A strategy, the integration of acquired businesses into our culture, and the favorable financing and debt restructuring collectively summed up to a very good year for TransDigm and our investors.
With that, let me hand it back over to Liza to kick off the Q&A.
Liza Sabol
Thank you, Greg. In order to give everyone the opportunity to ask questions, I would ask that you limit your questions to two per caller. If you have further questions, I would ask that you re-insert yourself into the queue and we will answer those questions as time permits. Operator, we are now ready to open the lines.
Question-and-Answer Session
Operator
(Operator instructions) And your first question today comes from the line of Carter Copeland with Barclays Capital.
Carter Copeland – Barclays Capital
Good quarter.
Nick Howley
Thanks Carter.
Carter Copeland – Barclays Capital
A couple of quick questions for you. The first one, Nick, I really appreciate the commentary on the aftermarket, and the bookings, and shipments. I wondered if you might give us a little color on how far out you can see in your current order book? Is this a sort of one to two quarters out is about the visibility you have got, and then beyond that we are kind of guessing?
Nick Howley
Yes. I think that's a fair point, one to two quarters. Surely no more than that.
Carter Copeland – Barclays Capital
Okay. And on the margin, I know there is a lot of moving pieces here, it sounded like the acquisition impact was – the dilution from the M&A was 4% for the year, but 3% in the quarter. And then I think you said McKechnie was 2% for the year. I am just looking at next year's margin, the EBITDA As Defined margin that you are showing as 49.3 at the midpoint, and you guys were north of 50 this quarter. And I am assuming that at least it looks like the trend in net acquisition dilution is going down and you think McKechnie would be even smaller next year. So, I am just wondering if part of this is mix between OE and aftermarket or part of it is just a little bit of conservatism, given what you can't see in the back half.
Nick Howley
Well, yes, and probably really, the answer is sort of all of the above. The things you can measure are, the OEM is growing faster than the aftermarket. And as you know, Carter, that naturally mixes it down a little bit.
Carter Copeland – Barclays Capital
Yes.
Nick Howley
In the defense, it is pretty good margin, and it’s – we are assuming it dropped a little. So, you have the same phenomenon going on there. You also have Schneller coming in, we just bought it at the end of the year. And Schneller comes in at a lower margin than the average and dilutes us down. Those are probably the two significant factors that sort of mitigate some of the underlying rise.
Carter Copeland – Barclays Capital
And do you have a sense, you said McKechnie was 2% for the year, do you have a sense of what you are expecting that dilution to be next year?
Greg Rufus
Carter, we had a couple of different measure points. This is Greg talking. When we said it in total of 4, it included both, what I will say, normal operating margins, but then don't forget during the year, we had to write up inventory, we had to write up backlog, and those what I would call purchase price accounting adjustments, accounted for the other two. So, your 4 is a combination of, what I would call, accounting and operational. So, sorry to confuse you there.
Nick Howley
But if you compare it to EBITDA –
Greg Rufus
As adjusted that we talk about – it’s about 2%, that’s correct. So, hopefully that helps you a little bit there.
Carter Copeland – Barclays Capital
And next year – that does help it. And next year, how much do you anticipate that falling?
Nick Howley
We will continue to have some amortization from that and from other acquisitions. I think that was about $0.17 on an EPS basis. And quite frankly, we don't or we haven’t – we don’t look or measure as McKechnie in total year-over-year. I mean, they are all going toward our value drivers and they are all improving their margin position. So, we lose that comparison pretty quick.
Greg Rufus
But Carter, I will just add. There are three things to think about, when you think about business. Again, the commercial OEM business is growing faster than, much faster than the defense business and faster than the commercial aftermarket, and that's the lowest margin. We do still have some residual from the McKechnie business, but that's getting better, but we have added the Schneller business also, and that's a significantly lower margin.
Carter Copeland – Barclays Capital
That’s great. Thank you very much for helping.
Greg Rufus
Those are the two things it sort of ends up almost – the increase in improvement is sort of offset by them and time will tell. We will see how that mix works out through the year.
Carter Copeland – Barclays Capital
Great. Thanks and congrats on a great year.
Greg Rufus
Thanks.
Operator
Your next question comes from the line of Robert Spingarn with Credit Suisse.
Robert Spingarn – Credit Suisse
Good morning, guys.
Nick Howley
Good morning, Robert.
Robert Spingarn – Credit Suisse
Wanted to dig a little bit into the organic growth embedded in the guidance. When I do the math and I get a little twisted up between pro forma organic growth and regular organic growth, but I am coming up with about 7.5%. Does that sound right?
Nick Howley
That's kind of a low.
Greg Rufus
This is in for revenue?
Nick Howley
Organic growth –
Greg Rufus
And revenue you are talking about now?
Robert Spingarn – Credit Suisse
Yes, I am talking about revenue, and I am just assigning your guidance from slide 6 across the businesses. So, up mid-teens in OE to –
Nick Howley
We gave you the pieces in the mix, I just didn't do the math.
Robert Spingarn – Credit Suisse
Yes, I was doing the math, but maybe not quite right or maybe it’s how to treat, how you define organic, but Greg, do you think that’s low 7.5?
Greg Rufus
I was thinking on an EBITDA space, I would have to see your math, because I don’t want to send people off, because again we try to give you all the details here, Rob.
Robert Spingarn – Credit Suisse
It’s the way we are assigning, x percent [ph] of the business is OE versus –
Greg Rufus
Let me give you the pieces again, Rob, and I think that and you can sort of assign the mix you want. Commercial transport aftermarket is about 10% up, business jet aftermarket mid-single digits. The commercial OEM business all of it is mid-teen percent up and defense is down low-single digits.
Robert Spingarn – Credit Suisse
We are talking ’12.
Nick Howley
And what I want to say is –
Greg Rufus
And that’s pro forma, that’s all pro forma.
Nick Howley
I will check with Rob after the call, because when you do GAAP versus pro forma and you can get a little bobbed up.
Greg Rufus
But everything I gave him is our attempted same-store base.
Nick Howley
And that’s the best way to look at our business.
Robert Spingarn – Credit Suisse
Okay. Couple of things on that. How do we think about that units versus pricing, particularly with regard to the aftermarket business?
Greg Rufus
You know, Rob, you ask this question every quarter. And every quarter, we closed the pricing.
Robert Spingarn – Credit Suisse
But it’s a valid question.
Greg Rufus
Of course, it’s a valid question, and it’s a valid answer.
Robert Spingarn – Credit Suisse
Well, let me – in '11, did you say what the organic aftermarket growth was in '11? Now, you gave us a lot of terrific information there. But was it in there?
Nick Howley
I gave total. It was just aftermarket. The amounts I gave for organic for '11 was total.
Robert Spingarn – Credit Suisse
And you do that for aftermarket?
Greg Rufus
We gave you, we have given to you, it was 21%.
Robert Spingarn – Credit Suisse
Organic?
Greg Rufus
Yes, that was by our same-store.
Robert Spingarn – Credit Suisse
Okay. So, my question –
Nick Howley
Rob, just a second.
Greg Rufus
21% on a quarter versus quarter basis, 23% on a full-year basis.
Robert Spingarn – Credit Suisse
Right. So, what are you showing?
Greg Rufus
And that’s our best guess. It’s same-store sales.
Robert Spingarn – Credit Suisse
Okay. You have got RPM growth at about 4% or 5%, just down a couple of hundred bps from this year, but commercial aftermarket growth is having from '11 to '12?
Nick Howley
Yes, that’s right. I think I said in my comments, we don't think the 20% plus is sustainable.
Robert Spingarn – Credit Suisse
No, I see that, but it's very sensitive. You have talked about in the past being very correlated with that RPM growth.
Nick Howley
Yes, but Rob, as I think you know, in inflection points in the market, it disconnects. And in the downturn – sort of in the downturn year, it disconnects, in the upturn year, it tends to disconnect.
Robert Spingarn – Credit Suisse
Okay. I will leave it with that. I guess I am hoping that aftermarket guides are little conservative.
Nick Howley
Yes. I will say, we are clearly – we have some concern about the economy. And where you will see that, if the economy softens a little, where you will see that first is in commercial aftermarket revenues.
Greg Rufus
You know, where we could be a little bobbed up to, we are talking about total organic growth here. That includes our defense, as we call it, flat. We have been focusing on commercial.
Nick Howley
Specifically talking to me, I am specifically talking –
Robert Spingarn – Credit Suisse
Yes, I am trying to isolate the commercial aftermarket.
Greg Rufus
All right. But those inventory swings are going to system.
Robert Spingarn – Credit Suisse
Okay, thanks guys.
Operator
Your next question comes from the line of Joe Nadol with JPMorgan.
Joe Nadol – JPMorgan
Hi, good morning.
Greg Rufus
Good morning.
Joe Nadol – JPMorgan
One more question on that aftermarket. Since you do have, combining the prior two questions, since you do have one or two quarters of visibility, I know you have been running over slightly above 20% commercial aftermarket organic growth, all year in '11, do you have visibility for that to decline all the way to 10% in Q1, or are you basically saying it's going to start to slide, and you have more concerns about the back half of the year?
Nick Howley
I think we will just leave our guidance for the year where it is. We don't give quarterly guidance.
Joe Nadol – JPMorgan
Okay. Turning to the margins, I guess a couple of things. There is obviously some major muscle movements that happened during this year, with McKechnie coming and diluting early in the year, and then taking a lot of cost out and getting those margins up through the year. As we think about seasonality in the business, is it fair to say that maybe Q4, you know, putting aside the acquisition impact, as we think about as adjusted EBITDA margins, that there really isn't a heck of a lot of seasonality, and that this past year was just – really just impacted by McKechnie?
Nick Howley
I would say, no, there is not a lot of seasonality in the business. The impacts in margins, typically, when you look at this business and this year is no different, it's impacted by two things primarily, the OEM aftermarket mix in that particular quarter and acquisitions. That's what impacts it. And usually when you see a point or two swing, when you strip out the acquisition impact, it's almost exclusively the aftermarket OEM mix generally.
Joe Nadol – JPMorgan
On that point and just finally, if you look at Q4 in isolation, your growth margins were flat if you exclude the impact of acquisitions, because you were down 300 bps and you said that was all acquisitions, half operational and half mix. And since your commercial aftermarket growth was so strong in Q4, why weren't margins – why weren’t organic margins, if you will, up a little bit in the quarter?
Greg Rufus
I lost all of that, I don’t know the question.
Nick Howley
I don't know, if you are coming up from prior year sequentially.
Joe Nadol – JPMorgan
Margins were flat, gross margin year-on-year in the quarter, if you strip out the acquisition impact, because you were down 300 bps you said, that was all acquisitions. And so as this mix improved year-on-year, because your aftermarket growth was so strong, why weren't margins up a little bit?
Greg Rufus
As we have said, we are always cautious on straight quarter-to-quarter pure comparisons. When we discussed last year's fourth quarter, it was a record quarter, which we said all the stars were aligned and this isn't sustainable. Having said that, our full-year margins have improved year-over-year, and we are pretty proud about that.
Joe Nadol – JPMorgan
Okay, all right. Thanks.
Operator
Your next question comes from the line of Michael Ciarmoli with KeyBanc Capital Markets.
Michael Ciarmoli – KeyBanc Capital Markets
Hi, good morning guys. Nice quarter. Thanks for taking my questions.
Greg Rufus
Thanks.
Michael Ciarmoli – KeyBanc Capital Markets
Just a follow-up still on this aftermarket growth. Nick, the growth rate last year or even next year, was there any provisioning for the 787 or 747-8 that, that added to the growth or that is expected to add to growth for 2012?
Nick Howley
Yes, that’s a good question. It's hard to say there was none in 2011, but I don't know there was nothing significant and I can't think of any. And there was surely nothing of any significance that's impacting that number much. In 2012, we really have not considered provisioning orders. They are awful difficult to predict. They are very dependent on when airlines buy, you know, and who provisions and who doesn't when they buy. You might have some upside on that.
Michael Ciarmoli – KeyBanc Capital Markets
Okay. And then, just on the softness in the bookings. I mean, are you seeing or can you break that down geographically? I know if you look at certainly what the U.S. carriers, European carriers are saying about capacity plans for next year. I think Lufthansa had some pretty significant cuts and it seems like the only reason some capacity is even increasing modestly is from new deliveries coming online, but are you seeing specific areas of softness in certain geographies, or you don't have that kind of visibility?
Nick Howley
I don’t. As I sit here, I don't know if I can give you any specifics on that. My general sense is we saw softening almost everywhere. Not softening, I will say flattening is a better way to put it. And I also would say I would not draw a lot of conclusion from that. Couple of months particularly in booking space, when you are running hot, pumping in a whole lot, but you would rather, you would pump hard to see it, often flat. But I wouldn’t draw much from that. I would say if we come talk to you next quarter and say the same thing, then I would be starting to draw more of a conclusion.
Michael Ciarmoli – KeyBanc Capital Markets
Okay. That’s helpful. And then the last one, your defense expectations for next year, what are you assuming pricing-wise? I mean, do you have to reign back on your pricing policies with the defense? Can you give us any color there in terms of what, I am assuming you are getting pressured on price increases from the defense end market?
Nick Howley
Yes, I would say there is always some pressure there and it always has been. I don't anticipate any significant change in our procedure, in our pricing policies.
Michael Ciarmoli – KeyBanc Capital Markets
Okay. All right. That’s helpful. Thanks a lot guys.
Operator
Your next question comes from the line of Myles Walton with Deutsche Bank.
Amit Mehrotra – Deutsche Bank
Hi, good morning.
Nick Howley
Good morning, Myles.
Amit Mehrotra – Deutsche Bank
It’s actually Amit Mehrotra here for Myles Walton. Can you just give us some impact on revenues in 2012 from divestitures, fasteners and AQS? What impact that has to divestitures in 2012?
Greg Rufus
Minimal. We didn't own the fasteners for about 45 days during our fiscal year. And the AQS wasn’t that big. It's obviously excluded from our guidance already in 2012, but the year-over-year, wasn't that big. In fact, actually you don't even see it because of discontinued –
Nick Howley
I thought we had that discontinued.
Greg Rufus
We discontinued (inaudible) for both years.
Nick Howley
Yes, so it’s not neither of the numbers.
Amit Mehrotra – Deutsche Bank
Okay. And then just looking, Nick, it looks like you guys are going to end 2012 with about $600 million of cash, and that's pro forma for the Harco expenditures?
Nick Howley
The $700 million I gave you and back drop 80 [ph].
Amit Mehrotra – Deutsche Bank
Right. And how long do you think you will wait for the pipeline to fill up before you make any more cash deployment decisions?
Nick Howley
I just don't know. I mean, as you know, in the past, we have moved on that when it made sense. It's very hard to say. We will watch the capital markets, we will watch the acquisition markets, and we will sort of make our call-by-call, almost a quarter-by-quarter call on that.
Amit Mehrotra – Deutsche Bank
Okay. And just last question on the defense market guidance, can you give us some color on the growth assumptions you have for both the aftermarket and the OE within defense?
Nick Howley
No, we just give the one. I would say, one of the issues always in the defense is it's a little harder to separate them out, because more of the aftermarket then happens in the commercial business, more of it sort of sneaks through the OEMs and sometimes it's harder to sort out. That's why we have given this one number.
Amit Mehrotra – Deutsche Bank
Okay. That’s fine. All right. Thanks guys, good quarter.
Operator
Your next question comes from the line of Carter Leake with BB&T Capital Markets.
Carter Leake – BB&T Capital Markets
Thanks for taking my question. On the guidance on defense, you say you are quite cautious and we can all guess why, but can you tell, is this related more to just general macro concerns on super committee or are you looking at specific ops tempo trends on legacy platforms?
Nick Howley
All right. It's mostly just concern about the overall budget. It all depends on spending. I would say it's not – in fact, as we try to give you a little sense, if you take the helicopter or helicopter/fixed-wing platforms, and the tanker transport platforms, which are probably, I think most people would say about this, maybe the most stable. That's about 60% of our business. So, that makes us feel okay. But we can't buy the fact that we are very uncertain, it's the way the spending levels go. And I would mostly describe it as, we are concerned about the receding tide drops all ships sort of a phenomenon.
Carter Leake – BB&T Capital Markets
So, what would it be in a negative super committee scenario, the 60% I agree with you, I think we all feel comfortable with those platforms. Any color on what it would be, specifically to TransDigm that we could look to? What in super committee discussions, if it went against us, would concern you?
Nick Howley
Carter, I have no idea how to – I just have no idea how to call that.
Carter Leake – BB&T Capital Markets
Okay.
Nick Howley
We sort of looked at everything we see now, everything we know now, we found our operating units take their best guesstimates and we tried to sort of put on a little bit of judgment to it at the corporate level, and this is sort of the best number we can come up with now. But I will tell you, if you ask me what my level of certainty around it is, I would say not real great. If you wanted to tell me it was 5% more than I said or 5% less than I said, I wouldn't argue with it. That’s all I know.
Carter Leake – BB&T Capital Markets
Okay. Let me just ask this, because we have already had several questions on aftermarket, organic aftermarket growth and I would still will have to go through machinations to get there. Is there any way that we could request that we do get some kind of a much clear organic, at least year-over-year organic growth rates on commercial aftermarket OE and military at least for just putting the request and rather than us doing sort of backwards math and stuff? Is there any –?
Nick Howley
We gave it to you. Didn’t I? I am trying to follow –
Carter Leake – BB&T Capital Markets
I don't know. You can tell by the questions. Sometimes it is difficult in getting to true organic rates, but maybe I am –
Nick Howley
You mean, you want to – are you asking if we will strip the price out?
Carter Leake – BB&T Capital Markets
Yes, just you would have a table, I mean –
Nick Howley
We don’t know. We don't disclose our pricing, but I can go back through, I mean, if that's unclear, I can go back through our organic growth rates for 2012.
Carter Leake – BB&T Capital Markets
Let's do it. I know it's probably trying a long trend for us.
Nick Howley
What we gave you is pro forma, same-store, it’s our best shot in organic growth.
Carter Leake – BB&T Capital Markets
And then let's just do it again, one more time for commercial aftermarket OE and military, just want to print it one more time.
Nick Howley
Okay. Commercial transport aftermarket, which is the big bulk of our aftermarket, 10%. Just for one second. Is this one on the slides?
Greg Rufus
Slide 6.
Nick Howley
I thought it was on one of the slides.
Carter Leake – BB&T Capital Markets
If it's all out on slide 6, you don’t need to go through it.
Nick Howley
That’s why I am just going to read again.
Carter Leake – BB&T Capital Markets
Okay, all right. Because if it’s on slide 6, my fault. All right, that’s all I have. Thank you.
Operator
Your next question comes from the line of Eric Hugel with Stephens Incorporated.
Eric Hugel – Stephens Incorporated
Hi, good morning guys. Good quarter.
Nick Howley
Good morning.
Eric Hugel – Stephens Incorporated
Can you talk about, your defense numbers were up 2% in the quarter, they have been down all year. Was there something that just hit or can you sort of talk about or sort of what drove that or is it just timing versus last –?
Nick Howley
I wouldn’t draw any conclusion. I would just, I would call that random fluctuation of the data.
Eric Hugel – Stephens Incorporated
All right. With regards to, you went through the adjustments that you were expecting, I guess the dividends and the non-cash and the acquisition. Is there any sort of specific timing that we should sort of think about? I know the dividend equivalency you think hits in the first quarter, but what about the other, the two $0.17, the non-cash? Should we spread those out evenly or are there timing items in there?
Greg Rufus
You are right. The dividend thing is the first quarter. The non-cash compensation is ratable over the year, and the acquisition stuff is going to be front-end loaded, most of it done by the first six months. Because some of it is tied to acquisition, as you got to peel off inventory off of an inventory toward backlog’s 12 months. So, it's going to be front-end loaded.
Eric Hugel – Stephens Incorporated
Okay. And your 35% tax rate, is that assuming or does it even matter for the R&D tax credit extension?
Greg Rufus
That includes the – no, for the extension. We don't include the extension when we do that, do we? Yes, not until it’s passed by law.
Eric Hugel – Stephens Incorporated
So, if it was passed, what would be the benefit that you would get?
Nick Howley
Less than $1 million right now as we look at next year.
Eric Hugel – Stephens Incorporated
Okay, great. Thanks a lot guys.
Operator
Your next question comes from the line of Christopher Chung [ph] with Rudman Capital. And Mr. Chung, your line is open.
Errol Rudman – Rudman Capital
Hello, this is Errol Rudman for Chris Chung. I wanted to ask what the – could you give us an estimate of, you give us an estimate of what the revenues are in the quarter from the acquisitions, because you gave unit growth, but can you give us an indication of what the margins were on the acquisitions?
Nick Howley
Errol, this is Nick. We don't break that out, but I think you can see the margins on the acquisitions are moving up, because we averaged down when we bought them, and we are starting to come pretty close to approaching the margins on our full business before we made all these acquisitions, but we don't break them out separately.
Errol Rudman – Rudman Capital
Yes, perhaps the question is to understand better how much room or how much potential there is of those acquisitions to get to the corporate average?
Nick Howley
Yes, there is more. They are not used out yet.
Greg Rufus
Errol, this is Greg. I would like to point out that our goal when we make an acquisition isn't to get it to the corporate averages, our goal is to whatever we buy, it is to create the shareholder value. So, in an absolute or a theoretical example, here I would love to buy something that’s 5% or 10%, and if I took it to 35% or 40%, we would all be happy. So, we don't have a firm goal to say, whatever we buy has to get through a TransDigm average, our goal is whatever we buy has to create shareholder value.
Errol Rudman – Rudman Capital
I understand, thank you.
Operator
Your next question comes from the line of Ken Herbert with Wedbush.
Ken Herbert – Wedbush Securities
Hi, good morning everybody.
Nick Howley
Good morning.
Ken Herbert – Wedbush Securities
Just wanted to ask a question on the original equipment guidance for the year. You talk about obviously margins being impacted by the greater mix and up mid teens, can you talk then, Nick, about the visibility you have in this segment? It seems like the initial outlook, specifically on the 787 certainly seems to be lower than what Boeing is talking about in terms of shipments that they try and ramp production, even if I apply a fairly significant haircut to what they talk about. How does the visibility look and what are you seeing on the original equipment side heading into 2012?
Nick Howley
Yes, let me separate the 787 from the rest of the commercial transport business. The rest of the commercial transport business, we have a fair amount of visibility. As opposed to the aftermarket, whereas I think it was Carter Copeland who started off and asked me whether he had one or two quarters of visibility, and I said, surely, no more than that. In the OEM world, and again, I am separating 787, we have more like three to four quarters of visibility. We are pretty well locked in. So, if you separate out the 787, we know it pretty well – you know, absent some disruptive event that makes everybody slow down.
The 787 frankly, we are just wary. We have had so many false numbers over the last four or five years, and we are unsure exactly how much inventory there is in the system, or how much they are going to leave in the system, it makes it a little bit difficult call. Now, that's the bad news on it. The good news on it is particularly at the beginning of the program like that, you don't make a whole lot of money. So, whether you call it wrong by 5 or 10 or 15 airplanes, is not going to make much a difference in the answer this year.
Ken Herbert – Wedbush Securities
Okay. So, I know the bigger scheme of things, it's a very small piece of the pie.
Nick Howley
Yes, that’s right.
Ken Herbert – Wedbush Securities
Yes. So, it sounds like then, good visibility on the legacy of the mature Boeing programs.
Nick Howley
And Airbus.
Ken Herbert – Wedbush Securities
And Airbus of course as well certainly. Can you give any, perhaps bookmark or way to think about how opportunities are for your content on the OE side, in your discussions with Boeing, specifically on the 737 MAX?
Nick Howley
I think it’s too early to really say much about that. There is not much we can say. In general, which 787 – which plane did you say again?
Ken Herbert – Wedbush Securities
The MAX, the new narrow-body.
Greg Rufus
The new one.
Nick Howley
Not the re-engine, new brand though.
Ken Herbert – Wedbush Securities
It’s a re-engine.
Nick Howley
Yes. Okay. I didn't know that you were making a distinction between a re-engine and a brand new airplane. A brand new airplane, I am going to say I have no idea. On the re-engine one, in general, this isn't 100% true, but in general, as much as possible, they try and stick with the suppliers they have on a base platform. So, you would expect to be fairly close and maybe hopefully pick up a little. But in general, it isn't a big disruptive event. That's probably about the best I can say.
Ken Herbert – Wedbush Securities
Okay, great. But I would imagine though that as on these mature programs, you have got opportunity for margin improvement over the course of the year from the existing businesses? Correct?
Nick Howley
I am not sure whether it's unique to the mature programs or not. But we generally between the mix of pricing and cost reduction, we generally think we have margin expansion opportunities almost everywhere.
Ken Herbert – Wedbush Securities
Okay. I was trying to make more of a distinction between the established versus, say the 787?
Nick Howley
Because their volume is going up?
Ken Herbert – Wedbush Securities
Exactly. Volume versus cost and productivity.
Nick Howley
Yes, I really wouldn't get too hung up on the 787. It isn't a big deal. It's not going to impact the 2012 number much, no matter what happens to it.
Ken Herbert – Wedbush Securities
Okay, perfect job. Thanks again and a great quarter.
Operator
Your next question comes from the line of Greg Halter with Great Lakes Review.
Greg Halter – Great Lakes Review
Hello and good morning.
Nick Howley
Good morning.
Greg Halter – Great Lakes Review
You provided some commentary on tax rates and so forth. Just wondering what your thoughts are on the share count for fiscal '12?
Nick Howley
Share count? It is – I don’t think, Greg, I don’t have that memorized.
Liza Sabol
It was 53.9 million.
Nick Howley
For next year also? And where is that, what page is it? It's a small amount that it’s going to go out.
Liza Sabol
So, the amount is going to be 53.9 million.
Nick Howley
We have to make an assumption of people exercising options, but it's not a material increase.
Greg Halter – Great Lakes Review
All right. And the previous questions, I think was surrounding the organic growth on Page 6, and is that what the question was? Was it fiscal '11 or fiscal '12, because I think '12 is what is presented on Page 6 of the presentation?
Nick Howley
Yes, Page 6 is ’12.
Greg Halter – Great Lakes Review
Okay.
Nick Howley
Now, page – I don’t know these pages, but Page 5 is '11.
Greg Halter – Great Lakes Review
Okay. And I know you have approved a share repurchase program, just curious if you bought any in the quarter?
Nick Howley
Yes. A small amount is kicking under that program, very small. We are talking fourth quarter, right?
Greg Halter – Great Lakes Review
Correct.
Nick Howley
Yes, fourth quarter, yes. It was a small amount. You will see it all in tomorrow's Q, but it was a small amount.
Greg Rufus
Yes, very small.
Greg Halter – Great Lakes Review
And for the year fiscal ’11, what were the international revenues to the total, if you have that?
Nick Howley
What I tell most people is, when you look at the GAAP numbers, the GAAP numbers reflect the destination of the sale. The best example is, if we sell to Airbus, it looks like the sale going to Germany and France, but then Airbus sells back to the United States and everywhere. If you want to think about how our sales are, you have to look at where the installed base is across the world, because that's ultimately where our sales are consumed and our products are consumed. And I know that's a tough answer because when you look at our GAAP statements, we look like we are predominantly selling within the States, but when you sell to Boeing, Boeing exports to Singapore. So, think of our sales as the installed base.
Greg Rufus
Yes, and the other way to make that even more obvious is, Aviall through Boeing is one of our biggest customers. A vast majority of those sales get recorded, and so it's going to Dallas, Texas. Almost none of that ends up in Dallas, Texas, it ends up all over the world.
Greg Halter – Great Lakes Review
Okay. And one last one, what are your expectations for capital spending for fiscal '12?
Greg Rufus
Fiscal '12 will be right around 2%, just a bit under. You know, we range between 1.5% and 2%, and we think we will be closer to the 2% than the 1.5% for fiscal ‘12.
Greg Halter – Great Lakes Review
Thank you very much.
Operator
You have a follow-up question from the line of Joe Nadol.
Joe Nadol – JPMorgan
Thanks. Yes, just a couple of these. You noted that 60% of defense sales were fixed-wing helicopter and tanker transport, what's the other 40%?
Nick Howley
Very, very broad range of platforms. We are on almost everything.
Joe Nadol – JPMorgan
Right. I mean, that includes almost everything, except for unmanned. Is this ground vehicles, is this –?
Nick Howley
No, it doesn’t. Doesn’t include any fighters.
Joe Nadol – JPMorgan
Okay. I thought that was fixed-wing, okay.
Nick Howley
Fixed-wing, I mean, helicopters and fixed-wing – did I say fixed, I am sorry. I didn't mean to, I apologize – I meant helicopters and rotary wing. If I said fixed-wing, I am sorry, that confused everybody.
Joe Nadol – JPMorgan
No, not at all. It could have been my mistake. The second follow-up though is, at the same time, you guys are –
Nick Howley
Let me just brief that again for everybody, because I am looking at my script. I said fixed-wing and helicopter, I meant rotary wing and helicopter, helicopters, and freighters and tankers.
Joe Nadol – JPMorgan
Okay, that’s helpful. The second thing is a bit more strategic. Nick, going into the last, into this downturn a few years ago, you guys were very quick to react to the financial crisis, etcetera, and you said you are cautious going into next year in the economy. There's a lot of uncertainty, but you are growing a lot, you are investing a lot, you are making all these acquisitions, you are promoting all these people, and at the same time, you are cautious. I know that we are looking for a nice growth next year and everything, but I am just wondering where you put your caution level on the spectrum of thinking about three years ago?
Nick Howley
We are nowhere near that numbers yet. But I would say, when Ray talked about the promotions, and that is mostly to fill holes that we found in acquisitions. In other words, that's not new hires, that's replacements. I would say in general, on adding costs and adding people, we are wary. Frankly, we are trying to be as careful as we can on that right now, just buy time, to see how things develop.
Joe Nadol – JPMorgan
Okay, fair enough. Thank you.
Operator
You have a follow-up question from the line of Michael Ciarmoli.
Michael Ciarmoli – KeyBanc Capital Markets
Hi, thanks. Nick, what are you anticipating from Schneller for next year? I know you guys had it for, I guess it was maybe just about a month. It's fair to say that's going to add about $70 million or so for the full year?
Nick Howley
I think we don’t disclose that, but I think we gave the revenue? Didn't we? And as you know Michael, we only owned it for two weeks, something like that. So, you can do the math.
Michael Ciarmoli – KeyBanc Capital Markets
All right. Perfect.
Nick Howley
There is a little market growth, but you could do the math and come close.
Michael Ciarmoli – KeyBanc Capital Markets
Okay, great. Thanks.
Operator
Ladies and gentlemen, this concludes the question-and-answer portion of today's event. I would like to turn the call back over to management for some closing remarks.
Liza Sabol
Thank you. I would like to thank everyone for participating on this morning's call. And just as a reminder, we expect to file our 2011 10-K no later than tomorrow.
Operator
Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the presentation and you may now disconnect. Have a wonderful day.
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