Before we begin, the company would like to remind you that statements made during this call, which are not historical in fact, including statements about our guidance 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 Securities and Exchange 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 and at the end of the slide presentation for reconciliation of these measures to their most directly comparable GAAP measures. With that, let me now turn the call over to Nick. W. Howley Good morning, and thanks for calling in to hear about our company. As usual, I'd like to start with some comments about our consistent strategy, as well as our current sense of the status of the aerospace market as it applies to our company, and I'll also give a short description of our recently announced acquisition of Schneller -- or contract signing for Schneller. To reiterate, we believe our business model is unique in the industry, both in its consistently and its ability to sustain and create intrinsic shareholder value through all phases of the aerospace cycle. To summarize some of the reasons we, about 90% or more of our sales were generated by proprietary aerospace products, and most of our net sales come from products for which we are the sole source provider. About 55% of our revenues, and a much higher percent of our EBITDA, comes from aftermarket sales. Aftermarket revenues have historically produced a higher gross margin and have produced relative stability through the cycles. Because of our uniquely high EBITDA margins, typically in the high 40s to 50% of revenue, and relatively low capital expenditures, 2% or less of revenue, TransDigm has year in, year out generated very strong free cash flow. We pay close attention to our capital structure, and we view it as another means to create shareholder value. As you know, we have been in the past and continue to be willing to lever up when we either see good opportunities or view our leverage as suboptimum for equity value creation. We typically begin to de-lever pretty quickly. We have a well-proven value-based operating strategy focused around what we refer to as our 3 value drivers. Those are new business development, continual cost improvement and value-based pricing. We stick to these concepts as the core of our operating management methods. This consistent approach has worked for us through up and down markets, and has allowed us to continually increase the intrinsic value of our business while steadily investing in new business and platforms. We have also been successful in regularly acquiring and integrating businesses. We acquire proprietary aerospace businesses with significant aftermarket content. We have acquired 36 such businesses, including 21 since our IPO in 2006. We have been able to acquire and improve proprietary aerospace businesses through all phases of the cycle.
Through our consistent focus on our operating value drivers, clear acquisition strategy and a close attention to our capital structure, we've been able to create intrinsic value for our investors for many years through up and down markets. As you may have seen, we recently announced the execution of a contract to buy Schneller LLC, for $288 million. The close is subject to typical closing conditions and regulatory approvals, but if all goes smoothly, this should close before our fiscal year end of September 30. We will utilize cash on our balance sheet to close this transaction. Schneller is headquartered in Kent, Ohio and is one of the very few companies in the world that design and supply highly engineered laminates, primarily for commercial transport airplanes. The proprietary nature of the product, the significant aftermarket content and the well-established platform positions fit well with our strategy. Schneller's products are on almost all of the Boeing and Airbus planes in service, as well as a high percentage of the regional jet fleet. Business is about 2/3 Commercial Aftermarket with the balance from Commercial OEM. For calendar year 2011, revenues are currently running in the mid-$80 million per year range, with EBITDA margins in the mid-30% range. We see upside in both the margins and the revenue. I can't say much more about this business at this time until we own it and also, because we have a confidentiality agreement until such time as we own it.Read the rest of this transcript for free on seekingalpha.com