UPDATING GUIDANCE FOR PRODUCT SUPPORT SALE
RADNOR, Pa., Feb. 7, 2024 /PRNewswire/ — Triumph Group, Inc. (NYSE:TGI) (“TRIUMPH” or the “Company”) today reported financial results for its third quarter of fiscal 2024, which ended December 31, 2023.
Third Quarter Fiscal 2024
Results of Product Support business reported as Discontinued Operations
Net sales of $285.0 million; Organic sales growth of 13%
Operating income of $19.7 million with operating margin of 6.9%; adjusted operating income of $19.8 million with adjusted operating margin of 6.9%
Net loss from continuing operations of ($11.9) million, or $(0.15) per share; adjusted net loss from continuing operations of ($12.9) million, or ($0.16) per share
Adjusted EBITDAP of $27.7 million with Adjusted EBITDAP margin of 9.8%
Adjusted EBITDAP for the remaining Systems and Support business of $39.4 million with an Adjusted EBITDAP margin of 16.4%
Cash provided by operations of $27.6 million and free cash flow of $22.4 million
Fiscal 2024 Guidance
Updating net sales to a range of $1.17 billion to $1.20 billion, reflecting 11 – 14% organic growth
Updating operating income to a range of $100.0 million to $110.0 million, reflecting operating margin of 9%
Updating adjusted EBITDAP to a range of $157.0 million to $167.0 million, reflecting Adjusted EBITDAP margin of 13-14%
Reaffirmed cash flow from operations of $65.0 million to $85.0 million, free cash flow of $40.0 million to $65.0 million, subject to the timing of closing of the sale of Product Support
Pro forma net leverage of 4.0x net debt to Adjusted EBITDAP
“The announced sale of our Product Support business will be transformative for our balance sheet and is on track for closure this quarter which will meaningfully accelerate our deleveraging progress,” said Dan Crowley, TRIUMPH’s chairman, president and chief executive officer. “Following the divestiture, we are right sizing our cost structure to achieve our multi-year profit margin and cash flow targets. By strengthening our balance sheet and focusing on our OEM component, spares and IP-based aftermarket business, TRIUMPH will further improve its capacity to win and profitably grow in the expanding markets we serve.”
“TRIUMPH generated its seventh consecutive quarter of year over year organic sales growth benefiting from increased commercial OEM production rates. TRIUMPH generated positive free cash flow in the quarter, although earnings and cash were lower than planned due to a finite set of industry-wide supply chain constraints which impacted deliveries in the quarter. We expect a very strong fourth quarter that benefits from deferred deliveries, historical seasonality, improving mix and incremental price improvements as well as working capital investments we made in the first half of the year.”
Mr. Crowley continued, “TRIUMPH accelerated new business capture with a year-to-date book to bill rate of 1.34, lifting our backlog 20% year over year to the highest level since March 2020. Going forward, the new TRIUMPH will deliver top and bottom-line growth rates at or above the market as we benefit from a focus on OEM and related aftermarket product lines.”
Third Quarter Fiscal 2024 Overview
Three Months Ended December 31,
($ in millions)
2023
2022
Commercial OEM
$
142.3
$
120.0
Military OEM
61.1
61.7
Total OEM Revenue
203.4
181.7
Commercial Aftermarket
35.1
30.9
Military Aftermarket
38.3
39.1
Total Aftermarket Revenue
73.4
70.0
Non-Aviation Revenue
7.3
9.5
Amortization of acquired contract liabilities
0.8
0.4
Total Net Sales*
$
285.0
$
261.7
* Differences due to rounding
Note> Aftermarket sales include both repair & overhaul services and spare parts sales.
Excluding impacts from divestitures and exited or sunsetting programs, organic Commercial OEM sales increased $30.7 million, or 27.5% primarily on production volumes on Boeing 737 and 787 programs.
Military OEM sales decreased from prior year as decreased sales on military rotorcraft were partially offset by increased volume on other military programs, including fixed wing platforms.
Aftermarket sales include both repair and overhaul services as well as the sales of spare parts. Commercial Aftermarket sales increased $4.2 million, or 13.8%, driven by the continued improvement in overall air travel metrics, favorably impacting both repair and overhaul services and spare part sales. The impacts from divestitures and exited or sunsetting programs on Commercial aftermarket sales was not significant.
Military aftermarket sales decreased primarily on reduced repair and overhaul sales on the UH-60 platform.
TRIUMPH’s results included the following:
($ millions except EPS)
Pre-tax
After-tax
Diluted EPS
Loss from Continuing Operations – GAAP
$
(10.8)
$
(11.9)
$
(0.15)
Adjustments
Debt extinguishment gain
(1.0)
(1.0)
(0.01)
Adjusted Income from Continuing Operations – non-GAAP
$
(11.8)
$
(12.9)
$
(0.16)
The number of shares used in computing diluted income per share for the third quarter of 2024 was 76.9 million.
Backlog, which represents the next 24 months of actual purchase orders with firm delivery dates or contract requirements, was $1.87 billion, up 18% from prior fiscal year end. This increase was primarily on commercial OEM platforms.
For the third quarter of fiscal 2024, cash flow provided by operations was $27.6 million, which was in line with expectations previously provided.
Conference Call
TRIUMPH will hold a conference call today, February 7th, at 8:30 a.m. (ET) to discuss the third quarter of fiscal 2024 results. The conference call will be available live and archived on the Company’s website at http://www.triumphgroup.com. A slide presentation will be included with the audio portion of the webcast, and the presentation has been posted on the Company’s website at https://www.triumphgroup.com/filings-financial/quarterly-results. An audio replay will be available from February 7th to February 13th by calling (844) 344-7529 (Domestic) or (412) 317-0088 (International), passcode #7026058
About TRIUMPH
TRIUMPH, headquartered in Radnor, Pennsylvania, designs, develops, manufactures, repairs and overhauls a broad portfolio of aerospace and defense systems and components. The company serves the global aviation industry, including original equipment manufacturers and the full spectrum of military and commercial aircraft operators.
More information about TRIUMPH can be found on the Company’s website at www.triumphgroup.com.
Forward Looking Statements
Statements in this release which are not historical facts are forward-looking statements under the provisions of the Private Securities Litigation Reform Act of 1995, including statements of expectations of or assumptions about financial and operational performance, revenues, earnings per share, cash flow or use, cost savings, operational efficiencies and organizational restructurings and our evaluation of potential adjustments to reported amounts, as described above. All forward-looking statements involve risks and uncertainties which could affect the Company’s actual results and could cause its actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company. Further information regarding the important factors that could cause actual results to differ from projected results can be found in Triumph Group’s reports filed with the SEC, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2023.
FINANCIAL DATA (UNAUDITED) ON FOLLOWING PAGES
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(in thousands, except per share data)
Three Months Ended
Nine Months Ended
December 31,
December 31,
CONDENSED STATEMENTS OF OPERATIONS
2023
2022
2023
2022
Net sales
$
284,955
$
261,662
$
833,456
$
805,104
Cost of sales (excluding depreciation shown below)
214,972
190,014
618,742
588,009
Selling, general & administrative
42,846
39,497
135,479
142,019
Depreciation & amortization
7,383
7,798
22,062
24,473
Legal judgment loss
—
—
1,338
—
Restructuring costs
43
—
1,985
1,074
Loss (gain) on sale of assets and businesses, net
—
720
12,208
(103,163)
Operating income
19,711
23,633
41,642
152,692
Interest expense and other, net
32,419
30,769
94,354
83,262
Debt modification and extinguishment (gain) loss
(1,046)
1,441
(5,125)
1,441
Warrant remeasurement gain
—
(5,537)
(8,545)
(5,537)
Non-service defined benefit income
(820)
(8,576)
(2,460)
(25,725)
Income tax expense
1,069
24
3,348
2,669
(Loss) income from continuing operations
(11,911)
5,512
(39,930)
96,582
(Loss) income from discontinued operations, net of tax
(3,991)
5,440
4,569
10,554
Net (loss) income
$
(15,902)
$
10,952
$
(35,361)
$
107,136
(Loss) earnings per share – basic:
Net (loss) income – continuing operations
$
(0.15)
$
0.09
$
(0.55)
$
1.49
Net (loss) income- discontinued operations
(0.05)
0.08
0.06
0.16
(Loss) earnings per share – basic
$
(0.20)
$
0.17
$
(0.49)
$
1.65
Weighted average common shares outstanding – basic
76,895
65,066
73,200
64,969
(Loss) earnings per share – diluted:
Net (loss) income- continuing operations
$
(0.15)
$
—
$
(0.55)
$
1.37
Net (loss) income- discontinued operations
(0.05)
0.08
0.06
0.16
(Loss) earnings per share – diluted
$
(0.20)
$
0.08
$
(0.49)
$
1.53
Weighted average common shares outstanding – diluted
76,895
68,454
73,200
66,346
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except share data)
BALANCE SHEETS
Unaudited
December 31,
2023
Audited
March 31,
2023
Assets
Cash and cash equivalents
$
162,899
$
227,403
Accounts receivable, net
127,494
156,116
Contract assets
89,406
86,740
Inventory, net
352,188
309,084
Prepaid and other current assets
16,578
14,073
Assets held for sale
180,642
140,096
Current assets
929,207
933,512
Property and equipment, net
141,583
138,622
Goodwill
511,571
509,449
Intangible assets, net
67,308
73,898
Other, net
26,913
28,697
Assets held for sale – noncurrent
—
30,666
Total assets
$
1,676,582
$
1,714,844
Liabilities & Stockholders’ Deficit
Current portion of long-term debt
$
3,342
$
3,162
Accounts payable
133,550
173,575
Contract liabilities
40,182
44,095
Accrued expenses
140,092
141,679
Liabilities related to assets held for sale
32,216
34,413
Current liabilities
349,382
396,924
Long-term debt, less current portion
1,627,810
1,688,620
Accrued pension and post-retirement benefits, noncurrent
301,661
359,375
Deferred income taxes, noncurrent
7,356
7,268
Other noncurrent liabilities
60,653
59,988
Liabilities related to assets held for sale – noncurrent
—
65
Stockholders’ Deficit:
Common stock, $.001 par value, 200,000,000 and 100,000,000 shares
authorized, 76,856,572 and 65,432,589 shares issued
77
65
Capital in excess of par value
1,107,241
964,741
Treasury stock, at cost, 631 and 0 shares
(5)
—
Accumulated other comprehensive loss
(534,676)
(554,646)
Accumulated deficit
(1,242,917)
(1,207,556)
Total stockholders’ deficit
(670,280)
(797,396)
Total liabilities and stockholders’ deficit
$
1,676,582
$
1,714,844
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Nine Months Ended December 31,
2023
2022
Operating Activities
Net (loss) income
$
(35,361)
$
107,136
Adjustments to reconcile net (loss) income to net cash used in
operating activities:
Depreciation and amortization
25,688
27,115
Amortization of acquired contract liability
(1,951)
(1,832)
Loss (gain) on sale of assets and businesses
12,208
(103,163)
Gain on modification and extinguishment of debt
(5,125)
—
Other amortization included in interest expense
4,458
4,857
Provision for credit losses
855
495
Warrants remeasurement gain
(8,545)
(6,435)
Share-based compensation
8,788
6,420
Changes in other assets and liabilities, excluding the effects of
acquisitions and divestitures:
Trade and other receivables
16,926
(8,579)
Contract assets
(4,144)
(14,667)
Inventories
(49,545)
(39,829)
Prepaid expenses and other current assets
(880)
839
Accounts payable, accrued expenses, and contract liabilities
(30,502)
(63,014)
Accrued pension and other postretirement benefits
(3,352)
(25,647)
Other, net
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