PR Newswire
RADNOR, Pa., Aug. 2, 2023
RADNOR, Pa., Aug. 2, 2023 /PRNewswire/ -- Triumph Group, Inc. (NYSE: TGI) ("TRIUMPH" or the "Company") today reported preliminary financial results for its first quarter of fiscal 2024, which ended June 30, 2023.
First Quarter Fiscal 2024
- Net sales of $327.1 million; Organic sales growth of 14%
- Operating income of $18.7 million with operating margin of 5.7%; adjusted operating income of $24.4 million with adjusted operating margin of 7.5%
- Net loss of ($12.8) million, or ($0.19) per share; adjusted net loss of ($7.0) million, or ($0.10) per diluted share
- Adjusted EBITDAP of $35.6 million with Adjusted EBITDAP margin of 10.9%
Fiscal 2024 Guidance
- Reaffirmed expected net sales of $1.39 billion to $1.43 billion, reflecting 7 - 10% organic growth
- Updated operating income of $159.0 million to $174.0 million, reflecting operating margin of 11 - 12%
- Reaffirmed adjusted EBITDAP of $210.0 million to $225.0 million, reflecting Adjusted EBITDAP margin of 15 - 16%
- Reaffirmed expected cash flow from operations of $60.0 million to $80.0 million; free cash flow of $35.0 million to $50.0 million
"Building off our positive momentum from fiscal 2023, TRIUMPH generated its fifth consecutive quarter of organic sales growth driven by continued strong commercial aftermarket and improving OEM demand," said Dan Crowley, TRIUMPH's chairman, president, and chief executive officer. "Free cash use was in line with our expectations and was impacted by seasonality due to increased working capital necessary to support higher deliveries. We continue to expect free cash flow to improve over the course of the year. With a growing and profitable backlog, TRIUMPH is well positioned to continue to grow organically and improve profitability, while also benefitting from the positive trends across our end markets."
Mr. Crowley continued, "As TRIUMPH continues to focus on deleveraging and optimizing its capital structure, the company recently completed the successful redemption of its warrants, increasing cash by $85 million and reducing debt by $14 million. TRIUMPH remains on track to deliver profitable growth and achieve its full year guidance as the Company is executing on its financial and operational goals."
First Quarter Fiscal 2024 Overview
Three Months Ended June 30, | ||||||||
($ in millions) | 2023 | 2022 | ||||||
Commercial OEM | $ | 117.2 | $ | 168.5 | ||||
Military OEM | 65.8 | 57.0 | ||||||
Total OEM Revenue | 183.0 | 225.5 | ||||||
Commercial Aftermarket | 87.6 | 63.2 | ||||||
Military Aftermarket | 47.6 | 50.9 | ||||||
Total Aftermarket Revenue | 135.2 | 114.1 | ||||||
Non-Aviation Revenue | 8.3 | 9.2 | ||||||
Amortization of acquired contract liabilities | 0.6 | 0.5 | ||||||
Total Net Sales* | $ | 327.1 | $ | 349.4 | ||||
* 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 $8.7 million, or 8.1% and included increased production volumes on Boeing 787 and 737 programs, offset by reductions across other commercial rotorcraft programs.
Military OEM sales increased $8.8 million, or 15.5%, all of which were organic, primarily due to increased sales related to the CH-53K, V-22, and UH-60 programs.
Commercial Aftermarket sales increased $24.5 million, or 38.7%. Excluding impacts from divestitures, organic Commercial Aftermarket sales increased $25.9 million, or 42.5%, driven by the continued improvement in overall air travel metrics, favorably impacting both repair and overhaul services and spare part sales on an equal basis.
Military aftermarket sales decreased $3.3 million, or 6.6%, all of which was organic, driven by reduced sales across several fixed wing platforms and reduced spares on rotorcraft platforms relative to the prior year, partially offset by increased repairs on rotorcraft platforms.
First quarter operating income of $18.7 million includes $1.9 million of shareholder cooperation costs and a $3.8 million reduction of the prior period gain on sale of assets and businesses. Net loss for the first quarter of 2024 was ($12.8) million or ($0.19) per share and includes $0.1 million in debt extinguishment losses.
TRIUMPH's results included the following:
($ millions except EPS) | Pre-tax | After-tax | Diluted EPS | |||||||||
Loss from Continuing Operations - GAAP | $ | (11.0) | $ | (12.8) | $ | (0.19) | ||||||
Adjustments | ||||||||||||
Loss on sale of assets and businesses, net | 3.8 | 3.8 | 0.06 | |||||||||
Shareholder cooperation expenses | 1.9 | 1.9 | 0.03 | |||||||||
Debt extinguishment losses | 0.1 | 0.1 | 0.00 | |||||||||
Adjusted Income from Continuing Operations - non-GAAP | $ | (5.2) | $ | (7.0) | $ | (0.10) | ||||||
The number of shares used in computing loss per share for the first quarter of 2024 was 66.3 million.
Backlog, which represents the next 24 months of actual purchase orders with firm delivery dates or contract requirements, was $1.74 billion, up 10% from prior fiscal year end. This increase was primarily on commercial narrow body platforms.
For the first quarter of fiscal 2024, cash flow used in operations was $63.7 million, which was in line with expectations previously provided and reflects seasonality due to increased working capital to support higher fiscal 2024 deliveries.
Potential Adjustments
We are currently evaluating the final accounting and process around the working capital components of recent legacy Aerospace Structures divestitures and related transition services agreements, which could result in non-cash adjustments to reported amounts, including gain or loss on sale of assets and businesses. At this time, we do not anticipate that potential adjustments would be material to the reported periods. We plan to provide an update upon completion of this evaluation process. These potential adjustments do not relate to previously disclosed indemnification claims related to the sale of the Stuart facility, which have been resolved in part at this time.
Conference Call
TRIUMPH will hold a conference call today, August 2nd, at 8:30 a.m. (ET) to discuss the first 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 August 2nd to August 9th by calling (844) 344-7529 (Domestic) or (412) 317-0088 (International), passcode #2972802.
About TRIUMPH
TRIUMPH, headquartered in Radnor, Pennsylvania, designs, engineers, 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) | ||||||||
TRIUMPH GROUP, INC. AND SUBSIDIARIES (in thousands, except per share data) | ||||||||
Three Months Ended | ||||||||
June 30, | ||||||||
CONDENSED STATEMENTS OF OPERATIONS | 2023 | 2022 | ||||||
Net sales | $ | 327,145 | $ | 349,384 | ||||
Cost of sales (excluding depreciation shown below) | 240,734 | 272,400 | ||||||
Selling, general & administrative | 55,786 | 51,745 | ||||||
Depreciation & amortization | 8,118 | 9,806 | ||||||
Restructuring costs | — | 699 | ||||||
Loss on sale of assets and businesses, net | 3,820 | — | ||||||
Operating income | 18,687 | 14,734 | ||||||
Interest expense and other, net | 38,447 | 31,912 | ||||||
Debt extinguishment losses | 64 | — | ||||||
Warrant remeasurement gain | (8,001) | — | ||||||
Non-service defined benefit income | (820) | (8,586) | ||||||
Income tax expense | 1,750 | 1,750 | ||||||
Net loss | $ | (12,753) | $ | (10,342) | ||||
Loss per share - basic: | ||||||||
Net loss | $ | (0.19) | $ | (0.16) | ||||
Weighted average common shares outstanding - basic | 66,347 | 64,820 | ||||||
Loss per share - diluted: | ||||||||
Net loss | $ | (0.19) | $ | (0.16) | ||||
Weighted average common shares outstanding - diluted | 66,347 | 64,820 | ||||||
FINANCIAL DATA (UNAUDITED) | ||||||||
TRIUMPH GROUP, INC. AND SUBSIDIARIES | ||||||||
BALANCE SHEETS | Unaudited | Audited | ||||||
Assets | ||||||||
Cash and cash equivalents | $ | 146,318 | $ | 227,403 | ||||
Accounts receivable, net | 163,649 | 196,775 | ||||||
Contract assets | 112,657 | 103,027 | ||||||
Inventory, net | 429,386 | 389,245 | ||||||
Prepaid and other current assets | 19,716 | 17,062 | ||||||
Current assets | 871,726 | 933,512 | ||||||
Property and equipment, net | 168,437 | 166,800 | ||||||
Goodwill | 510,855 | 509,449 | ||||||
Intangible assets, net | 71,737 | 73,898 | ||||||
Other, net | 32,115 | 31,185 | ||||||
Total assets | $ | 1,654,870 | $ | 1,714,844 | ||||
Liabilities & Stockholders' Deficit | ||||||||
Current portion of long-term debt | $ | 3,313 | $ | 3,162 | ||||
Accounts payable | 149,107 | 197,932 | ||||||
Contract liabilities | 47,882 | 44,482 | ||||||
Accrued expenses | 144,452 | 151,348 | ||||||
Current liabilities | 344,754 | 396,924 | ||||||
Long-term debt, less current portion | 1,677,603 | 1,688,620 | ||||||
Accrued pension and post-retirement benefits, noncurrent | 314,154 | 359,375 | ||||||
Deferred income taxes, noncurrent | 7,444 | 7,268 | ||||||
Other noncurrent liabilities | 57,369 | 60,053 | ||||||
Stockholders' Deficit: | ||||||||
Common stock, $.001 par value, 100,000,000 shares authorized, 69,964,040 | 70 | 65 | ||||||
Capital in excess of par value | 1,019,891 | 964,741 | ||||||
Accumulated other comprehensive loss | (546,106) | (554,646) | ||||||
Accumulated deficit | (1,220,309) | (1,207,556) | ||||||
Total stockholders' deficit | (746,454) | (797,396) | ||||||
Total liabilities and stockholders' deficit | $ | 1,654,870 | $ | 1,714,844 | ||||
FINANCIAL DATA (UNAUDITED) | ||||||||
TRIUMPH GROUP, INC. AND SUBSIDIARIES (dollars in thousands, except share data) | ||||||||
Three Months Ended June 30, | ||||||||
2023 | 2022 | |||||||
Operating Activities | ||||||||
Net loss | $ | (12,753) | $ | (10,342) | ||||
Adjustments to reconcile net loss to net cash used in | ||||||||
Depreciation and amortization | 8,118 | 9,806 | ||||||
Amortization of acquired contract liability | (575) | (523) | ||||||
Loss on sale of assets and businesses | 3,820 | — | ||||||
Other amortization included in interest expense | 1,368 | 1,562 | ||||||
Provision for credit losses | 534 | 200 | ||||||
Warrants remeasurement gain | (8,001) | — | ||||||
Share-based compensation | 3,622 | 1,578 | ||||||
Changes in other assets and liabilities, excluding the effects of | ||||||||
Trade and other receivables | 32,519 | 4,474 | ||||||
Contract assets | (10,180) | (8,638) | ||||||
Inventories | (39,818) | (19,190) | ||||||
Prepaid expenses and other current assets | (1,830) | (7,538) | ||||||
Accounts payable, accrued expenses, and contract liabilities | (42,441) | (56,352) | ||||||
Accrued pension and other postretirement benefits | (1,262) | (8,322) | ||||||
Other, net | 3,155 | |||||||
