Press Release

Triumph Group Reports Second Quarter Fiscal 2020 Results

Reports Organic Revenue Growth of 13%

Margin Expansion Across All Segments

Maintains Fiscal Year 2020 Guidance including Positive Free Cash Flow

Company Release - 11/7/2019 6:00 AM ET

BERWYN, Pa., Nov. 7, 2019 /PRNewswire/ -- Triumph Group, Inc. (NYSE: TGI) ("Triumph" or the "Company") today reported financial results for its second quarter of fiscal year 2020, which ended September 30, 2019.

Second Quarter Fiscal 2020

  • Net sales of $772.1 million
  • Operating income of $61.0 million with operating margin of 8%; adjusted operating income of $59.1 million with adjusted operating margin of 8%
  • Net income of $42.7 million, or $0.85 per share; adjusted net income of $32.2 million, or $0.64 per diluted share
  • Cash flow used in operations of ($15.6) million, and free cash flow use of ($24.5) million

Outlook for Fiscal 2020

  • Net sales guidance of between $2.8 billion to $2.9 billion
  • GAAP earnings per diluted share of between $1.34 and $2.35
  • Adjusted earnings per diluted share of between $2.35 to $2.95
  • Positive free cash flow of between $0 to $50.0 million

"Triumph Group delivered solid second quarter results, demonstrating momentum as we head into the back half of the year," stated Daniel J. Crowley, Triumph's president and chief executive officer. "During our fiscal second quarter, all three of our business segments delivered year-over-year organic growth in net sales. We also drove significant margin expansion in Integrated Systems both sequentially and year-over-year as customers continued to demand our unique value proposition.  Product Support and Aerospace Structures also generated year-over-year organic improvement in operating margin."

Mr. Crowley continued, "Our second quarter cash usage includes seasonal working capital build and we expect to be cash flow positive in the second half of the year.  Given our solid first half results and improving operational performance, we remain confident that Triumph is on track to deliver on our full-year commitments and guidance." 

Mr. Crowley concluded, "Triumph is stronger, more focused and predictable as a result of our comprehensive portfolio and operational actions which we expect to generate increased value for our customers and shareholders."

Second Quarter Fiscal Year 2020 Overview

After accounting for divestitures, sales for the second quarter of fiscal 2020 were up 12.8% organically from the comparable prior year period.  Growth was driven by increased volumes on engine and military rotorcraft components, aftermarket accessory services, legacy structures programs and new engineering services.

Second quarter operating income of $61.0 million included a $5.7 million adjustment for Union incentives, ($8.0) million for gain on previous divestitures, ($5.4) million for a legal settlement and $5.8 million of restructuring costs.  Net income for the second quarter of fiscal year 2020 was $42.7 million, or $0.85 per share.  On an adjusted basis, net income was $32.2 million, or $0.64 per diluted share. 

Triumph's results included the following: 

($ millions except EPS)


   Pre-tax


  After-tax


Diluted EPS

Income from Continuing Operations - GAAP 


$           54.1


$        42.7


$         0.85








Gain on sale of assets and businesses


(8.0)


(6.3)


(0.12)

Curtailment gain & settlement, net


(14.4)


(11.4)


(0.22)

Legal settlement gain, net


(5.4)


(4.3)


(0.08)

Union incentives


5.7


4.5


0.09

Refinancing cost


3.0


2.4


0.05

Transformation related costs:







   Restructuring costs (cash)


5.8


4.6


0.09








Adjusted Income from Continuing Operations - non-GAAP


$         40.8


$         32.2


$         0.64








The number of shares used in computing diluted earnings per share for the second quarter of 2020 was 50.5 million.

Backlog, excluding the impact of divestitures was flat at $3.7 billion compared to the prior year period and on a sequential basis.  This reflects growth in Integrated Systems offset by sunsetting legacy Aerospace Structures programs. 

For the six-months ended September 30, 2019, cash flow used in operations was ($11.3) million, reflecting continued investment in ramping programs and liquidation of approximately $40.0 million in prior period advances against current period deliveries.    

Outlook

As noted previously, the Boeing 737 MAX program historically has contributed a single-digit percentage of annual revenue. The Company continues to expect the FY20 revenue impact to be less than 2% of sales with similar impacts to operating income and cash. As such, the Company does not anticipate any changes to its guidance and maintains its guidance below.

Based on anticipated aircraft production rates and including the impacts of pending program transfers, the Company continues to expect that net sales for fiscal year 2020 will be approximately $2.8 billion to $2.9 billion.

The Company expects GAAP fiscal year 2020 earnings per diluted share to be $1.34 to $2.35 and adjusted earning per diluted share to be $2.35 to $2.95.      

The Company expects fiscal year 2020 cash provided from operations of $50.0 million to $110.0 million, and positive free cash flow of $0 to $50.0 million.

The Company's current outlook reflects adjustments detailed in the attached tables but excludes the impact of any potential future divestitures. 

Conference Call 

Triumph Group will hold a conference call today, November 7th, at 8:00 a.m. (ET) to discuss the second quarter fiscal year 2020 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, which presentation has been posted on the Company's website at http://ir.triumphgroup.com/QuarterlyResults. An audio replay will be available from November 7th to November 15th by calling (855) 859-2056 (Domestic) or (404) 537-3406 (International), passcode #5489726.

About Triumph Group 

Triumph Group, Inc., headquartered in Berwyn, Pennsylvania, designs, engineers, manufactures, repairs and overhauls a broad portfolio of aerospace and defense systems, components and structures. 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 and operational efficiencies and organizational restructurings.  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, 2019.

FINANCIAL DATA (UNAUDITED) ON FOLLOWING PAGES

 

FINANCIAL DATA  (UNAUDITED)















TRIUMPH GROUP, INC. AND SUBSIDIARIES

(in thousands, except per share data)



































Three Months Ended


Six Months Ended








September 30,


September 30,
















CONDENSED STATEMENTS OF INCOME




2019


2018


2019


2018






























Net sales





$     772,110


$    855,108


$    1,502,341


$    1,688,008
















Cost of sales (excluding depreciation shown below)




622,236


724,474


1,204,469


1,494,688


Selling, general & administrative expenses




66,201


69,551


128,538


151,208


Depreciation & amortization expense




30,219


38,134


74,269


76,945


Restructuring expenses




5,782


11,832


8,746


15,879


Legal settlement, net




(5,400)


-


(5,400)


-


(Gain) loss on sale of assets and businesses




(7,965)


13,118


(4,829)


17,837


       Operating income (loss)




61,037


(2,001)


96,548


(68,549)
















Interest expense and other




35,400


28,714


62,891


54,206


Non-service defined benefit income




(28,416)


(16,524)


(43,291)


(33,061)


Income tax expense




11,352


485


16,159


1,516
















Net income (loss)




$      42,701


$     (14,676)


$        60,789


$        (91,210)
















Earnings per share - basic:


























Net income (loss)




$          0.85


$        (0.30)


$            1.22


$           (1.84)
















Weighted average common shares outstanding - basic




49,987


49,628


49,927


49,590
















Earnings per share - diluted:


























Net income (loss)




$          0.85


$        (0.30)


$            1.21


$           (1.84)
















Weighted average common shares outstanding - diluted




50,460


49,628


50,385


49,590
















Dividends declared and paid per common share




$          0.04


$         0.04


$            0.08


$            0.08






























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(Continued)












FINANCIAL DATA (UNAUDITED)















TRIUMPH GROUP, INC. AND SUBSIDIARIES

(dollars in thousands, except per share data)















BALANCE SHEET






Unaudited 


Audited 










September 30,


March 31,












2019


2019








Assets









Cash and cash equivalents








$        24,852


$         92,807



Accounts receivable, net








342,306


373,590



Contract assets








300,670


326,667



Inventory, net 








454,402


413,560



Prepaid and other current assets








20,854


34,446




Current assets








1,143,084


1,241,070

















Property and equipment, net








502,990


543,710



Goodwill








578,916


583,225



Intangible assets, net








405,982


430,954



Other, net








130,831


55,615

















Total assets








$    2,761,803


$    2,854,574






















Liabilities & Stockholders' Deficit























Current portion of long-term debt








$          7,759


$          8,201



Accounts payable








418,706


433,783



Contract liabilities








276,967


293,719



Accrued expenses








221,966


239,572




Current liabilities








925,398


975,275

















Long-term debt, less current portion








1,460,774


1,480,620



Accrued pension and post-retirement benefits, noncurrent







554,400


540,479



Deferred income taxes, noncurrent








21,116


6,964



Other noncurrent liabilities








390,939


424,549

















Stockholders' Deficit:














Common stock, $.001 par value, 100,000,000 shares













  authorized, 52,460,920 and 52,460,920 shares issued







52


52




Capital in excess of par value








858,030


867,545




Treasury stock, at cost, 2,386,397 and 2,573,652 shares







(145,496)


(159,154)




Accumulated other comprehensive loss








(565,901)


(487,684)




Accumulated deficit








(737,509)


(794,072)




   Total stockholders' deficit








(590,824)


(573,313)

















Total liabilities and stockholders' deficit








$    2,761,803


$    2,854,574












































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(Continued)












FINANCIAL DATA (UNAUDITED)















TRIUMPH GROUP, INC. AND SUBSIDIARIES

(dollars in thousands)















CASH FLOWS






Six Months Ended










September 30,


























2019


2018


Operating Activities













Net income (loss)








$        60,789


$        (91,210)

















Adjustments to reconcile net income (loss) to net cash used in operating activities:










Depreciation & amortization








74,269


76,945




Amortization of acquired contract liabilities








(39,556)


(34,038)




Loss on divestitures & assets held for sale








(4,829)


17,837




Curtailment and settlement gain, net








(14,373)


-




Other amortization included in interest expense







6,955


4,852




Provision for doubtful accounts receivable







1,140


212




Provision for deferred income taxes








15,159


-




Employee stock compensation








5,290


5,728

















Changes in assets & liabilities, excluding the effects of acquisitions/divestitures












Trade and other receivables








29,436


(4,722)




Contract assets








33,930


6,129




Inventories








(41,807)


(49,981)




Prepaid expenses and other current assets








16,209


5,918




Accounts payable, accrued expenses and contract liabilities







(121,112)


(101,460)




Accrued pension and other postretirement benefits







(32,114)


(37,021)




Other








21


3,632



Net cash used in operating activities








(10,593)


(197,179)


Investing Activities













Capital expenditures








(16,995)


(24,254)



(Payments on) Proceeds from sale of assets








(574)


41,037



Net cash (used in) provided by investing activities








(17,569)


16,783


Financing Activities













Net (decrease) increase in revolving credit facility








(147,615)


219,773



Proceeds from issuance of long-term debt and finance leases







546,000


24,700



Repayment of debt and capital lease obligations








(415,447)


(58,823)



Payment of deferred financing costs








(16,275)


(1,922)



Dividends paid








(4,001)


(3,981)



Repurchase of restricted shares for minimum tax obligation







(1,048)


(548)



Net cash (used in) provided by financing activities








(38,386)


179,199



Effect of exchange rate changes on cash








(1,407)


(1,395)



Net change in cash








(67,955)


(2,592)



Cash and equivalents at beginning of period








92,807


35,819



Cash and equivalents at end of period








$        24,852


$         33,227
















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(Continued)












FINANCIAL DATA (UNAUDITED)















TRIUMPH GROUP, INC. AND SUBSIDIARIES

(dollars in thousands)











































SEGMENT DATA




Three Months Ended


Six Months Ended








September 30,


September 30,






















2019


2018


2019


2018
















Net sales:














Integrated Systems




$     285,980


$    260,717


$       538,206


$       501,756



Aerospace Structures




422,579


528,366


841,757


1,060,753



Product Support




67,394


72,199


129,149


138,414



Elimination of inter-segment sales




(3,843)


(6,174)


(6,771)


(12,915)








$     772,110


$    855,108


$    1,502,341


$    1,688,008
















Operating income (loss):













Integrated Systems




$      51,472


$      39,866


$        86,244


$         75,275



Aerospace Structures




13,608


(22,744)


25,891


(102,331)



Product Support




10,865


11,514


20,142


19,183



Corporate




(12,044)


(27,371)


(30,439)


(54,948)



Share-based compensation expense




(2,864)


(3,266)


(5,290)


(5,728)








$      61,037


$       (2,001)


$        96,548


$        (68,549)
















Operating Margin %













Integrated Systems




18.0%


15.3%


16.0%


15.0%



Aerospace Structures




3.2%


-4.3%


3.1%


-9.6%



Product Support




16.1%


15.9%


15.6%


13.9%



Consolidated




7.9%


-0.2%


6.4%


-4.1%
















Depreciation and amortization:













Integrated Systems




$        6,983


$        7,384


$        14,050


$         14,939



Aerospace Structures




21,285


28,294


56,344


57,214



Product Support




1,099


1,664


2,189


3,334



Corporate




852


792


1,686


1,458








$      30,219


$      38,134


$        74,269


$         76,945
















Amortization of acquired contract liabilities:













Integrated Systems




$       (9,624)


$       (8,768)


$       (17,749)


$        (17,617)



Aerospace Structures




(12,992)


(8,036)


(21,807)


(16,421)








$     (22,616)


$     (16,804)


$       (39,556)


$        (34,038)
















Capital expenditures:













Integrated Systems




$        3,909


$        3,828


$          6,760


$          5,437



Aerospace Structures




4,032


7,077


8,005


17,215



Product Support




633


671


1,666


1,019



Corporate




331


478


564


583








$        8,905


$      12,054


$        16,995


$         24,254






























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(Continued)

FINANCIAL DATA  (UNAUDITED)


TRIUMPH GROUP, INC. AND SUBSIDIARIES

(dollars in thousands)


Non-GAAP Financial Measure Disclosures


We prepare and publicly release quarterly unaudited financial statements prepared in accordance with GAAP. In accordance with Securities and Exchange Commission (the "SEC") guidance on Compliance and Disclosure Interpretations, we also disclose and discuss certain non-GAAP financial measures in our public releases. Currently, the non-GAAP financial measure that we disclose is Adjusted EBITDA and Adjusted EBITDAP, which is our net income before interest, income taxes, amortization of acquired contract liabilities, curtailments, settlements and early retirement incentives, legal settlements, depreciation and amortization and Adjusted EBITDA, less pension & other postretirement benefits. We disclose Adjusted EBITDA and Adjusted EBITDAP on a consolidated and Adjusted EBITDAP an operating segment basis in our earnings releases, investor conference calls and filings with the SEC. The non-GAAP financial measures that we use may not be comparable to similarly titled measures reported by other companies. Also, in the future, we may disclose different non-GAAP financial measures in order to help our investors more meaningfully evaluate and compare our future results of operations to our previously reported results of operations.


We view Adjusted EBITDA and Adjusted EBITDAP as operating performance measure and as such we believe that the GAAP financial measure most directly comparable to it is net income. In calculating Adjusted EBITDA and Adjusted EBITDAP, we exclude from net income the financial items that we believe should be separately identified to provide additional analysis of the financial components of the day-to-day operation of our business. We have outlined below the type and scope of these exclusions and the material limitations on the use of these non-GAAP financial measures as a result of these exclusions. Adjusted EBITDA and Adjusted EBITDAP are not measurements of financial performance under GAAP and should not be considered as a measure of liquidity, as an alternative to net income (loss), income from continuing operations, or as an indicator of any other measure of performance derived in accordance with GAAP.  Investors and potential investors in our securities should not rely on Adjusted EBITDA or Adjusted EBITDAP as substitutes for any GAAP financial measure, including net income (loss) or income from continuing operations. In addition, we urge investors and potential investors in our securities to carefully review the reconciliation of Adjusted EBITDA and Adjusted EBITDAP to net income set forth below, in our earnings releases and in other filings with the SEC and to carefully review the GAAP financial information included as part of our Quarterly Reports on Form 10-Q and our Annual Reports on Form 10-K that are filed with the SEC, as well as our quarterly earnings releases, and compare the GAAP financial information with our Adjusted EBITDA and Adjusted EBITDAP.


Adjusted EBITDA and Adjusted EBITDAP is used by management to internally measure our operating and management performance and by investors as a supplemental financial measure to evaluate the performance of our business that, when viewed with our GAAP results and the accompanying reconciliation, we believe provides additional information that is useful to gain an understanding of the factors and trends affecting our business.  We have spent more than 20 years expanding our product and service capabilities partially through acquisitions of complementary businesses.  Due to the expansion of our operations, which included acquisitions, our net income has included significant charges for depreciation and amortization.  Adjusted EBITDA and Adjusted EBITDAP exclude these charges and provides meaningful information about the operating performance of our business, apart from charges for depreciation and amortization. We believe the disclosure of Adjusted EBITDA and Adjusted EBITDAP helps investors meaningfully evaluate and compare our performance from quarter to quarter and from year to year. We also believe Adjusted EBITDA and Adjusted EBITDAP is a measure of our ongoing operating performance because the isolation of non-cash income and expenses, such as amortization of acquired contract liabilities, depreciation and amortization, and non-operating items, such as interest and income taxes, provides additional information about our cost structure, and, over time, helps track our operating progress. In addition, investors, securities analysts and others have regularly relied on Adjusted EBITDA and Adjusted EBITDAP to provide a financial measure by which to compare our operating performance against that of other companies in our industry. 


Set forth below are descriptions of the financial items that have been excluded from our net income to calculate Adjusted EBITDA and Adjusted EBITDAP and the material limitations associated with using this non-GAAP financial measure as compared to net income: 


Divestitures may be useful for investors to consider because they reflect gains or losses from sale of operating units.  We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations.


Legal settlements may be useful to investors to consider because they reflect gains or losses from disputes with third parties. We do not believe that these earnings necessarily reflect the current and ongoing cash earnings related to our operations.


Non-service defined benefit income (inclusive of the adoption of ASU 2017-07) may be useful to investors to consider because they represent the cost of post retirement benefits to plan participants, net of the assumption of returns on the plan's assets and are not indicative of the cash paid for such benefits.  We do not believe these earnings (expenses) necessarily reflect the current and ongoing cash earnings related to our operations. 


Amortization of acquired contract liabilities may be useful for investors to consider because it represents the non-cash earnings on the fair value of below market contracts acquired through acquisitions. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations. 


Amortization expenses may be useful for investors to consider because it represents the estimated attrition of our acquired customer base and the diminishing value of product rights and licenses. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure. 


Depreciation may be useful for investors to consider because they generally represent the wear and tear on our property and equipment used in our operations. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure. 


The amount of interest expense and other we incur may be useful for investors to consider and may result in current cash inflows or outflows. However, we do not consider the amount of interest expense and other to be a representative component of the day-to-day operating performance of our business. 



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(Continued)

FINANCIAL DATA  (UNAUDITED)


TRIUMPH GROUP, INC. AND SUBSIDIARIES

(dollars in thousands)


Non-GAAP Financial Measure Disclosures (continued)


Income tax expense may be useful for investors to consider because it generally represents the taxes which may be payable for the period and the change in deferred income taxes during the period and may reduce the amount of funds otherwise available for use in our business.  However, we do not consider the amount of income tax expense to be a representative component of the day-to-day operating performance of our business. 


Management compensates for the above-described limitations of using non-GAAP measures by using a non-GAAP measure only to supplement our GAAP results and to provide additional information that is useful to gain an understanding of the factors and trends affecting our business. 


The following table shows our Adjusted EBITDA and Adjusted EBITDAP reconciled to our net income for the indicated periods (in thousands): 



Three Months Ended


Six Months Ended



September 30,


September 30,



2019


2018


2019


2018


     Adjusted Earnings before Interest, Taxes,
Depreciation, Amortization, and Pension (EBITDAP):












     Net Income (Loss)




$      42,701


$     (14,676)


$        60,789


$        (91,210)
















     Add-back:












          Income Tax Expense 




11,352


485


16,159


1,516


          Interest Expense and Other




35,400


28,714


62,891


54,206


          Curtailment gain & special termination, net




(14,373)


-


(14,373)


-


          Union Represented Employee Incentives




5,671


-


5,671


-


          (Gain) loss on sales of assets and businesses




(7,965)


13,118


(4,829)


17,837


          Legal Settlement Gain, net




(5,400)


-


(5,400)


-


          Adoption of ASU 2017-07




-


-


-


87,241


          Amortization of Acquired Contract Liabilities




(22,616)


(16,804)


(39,556)


(34,038)


          Depreciation and Amortization




30,219


38,134


74,269


76,945
















     Adjusted Earnings before Interest, Taxes, 












       Depreciation and Amortization ("Adjusted EBITDA")



$      74,989


$      48,971


$       155,621


$       112,497
















           Non-service defined benefit income (excluding curtailments, etc.)


(14,043)


(16,524)


(28,918)


(33,061)


     Adjusted Earnings before Interest, Taxes, 












       Depreciation and Amortization, and Pension ("Adjusted EBITDAP")


$      60,946


$      32,447


$       126,703


$         79,436
















     Net Sales




$     772,110


$    855,108


$    1,502,341


$    1,688,008
















     Net Income (Loss) Margin




5.5%


-1.7%


4.0%


-5.4%
















     Adjusted EBITDAP Margin




8.1%


3.9%


8.7%


4.8%



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(Continued)












FINANCIAL DATA  (UNAUDITED)















TRIUMPH GROUP, INC. AND SUBSIDIARIES

(dollars in thousands)















Non-GAAP Financial Measure Disclosures (continued)


























Adjusted Earnings before Interest, Taxes,
Depreciation, Amortization and Pension (EBITDAP):




Three Months Ended September 30, 2019





Segment Data






Total


Integrated
Systems


Aerospace
Structures


Product
Support


Corporate /
Eliminations
















Net Income


$       42,701
























Add-back:













     Non-service defined benefit income


(28,416)










     Income Tax Benefit


11,352










     Interest Expense and Other


35,400
























Operating Income (Loss)


$       61,037


$      51,472


$      13,608


$        10,865


$        (14,908)
















     (Gain) loss on sales of assets & businesses


(7,965)


-


(10,121)


-


2,156


     Legal Settlement Gain, net


(5,400)


-


-


-


(5,400)


     Union Represented Employee Incentives


5,671


-


5,671


-


-


     Amortization of Acquired Contract Liabilities


(22,616)


(9,624)


(12,992)


-


-


     Depreciation and Amortization


30,219


6,983


21,285


1,099


852
















Adjusted Earnings (Losses) before Interest, Taxes, 












   Depreciation and Amortization, Pension ("Adjusted EBITDAP")

$       60,946


$      48,831


$      17,451


$        11,964


$        (17,300)
















Net Sales



$     772,110


$     285,980


$    422,579


$        67,394


$         (3,843)
















Adjusted EBITDAP Margin


8.1%


17.7%


4.3%


17.8%


n/a






























Adjusted Earnings before Interest, Taxes,
Depreciation, Amortization, and Pension (EBITDAP):




Six Months Ended September 30, 2019





Segment Data






Total


Integrated
Systems


Aerospace
Structures


Product
Support


Corporate */
Eliminations
















Net Income


$       60,789
























Add-back:













     Non-service defined benefit income


(43,291)










     Income Tax Expense


16,159










     Interest Expense and Other


62,891
























Operating Income (Loss)


$       96,548


$      86,244


$      25,891


$        20,142


$        (35,729)
















     (Gain) loss on sales of assets & businesses


(4,829)


-


(10,121)


-


5,292


     Legal Settlement Gain, net


(5,400)


-


-


-


(5,400)


     Union Represented Employee Incentives


5,671


-


5,671


-


-


     Amortization of Acquired Contract Liabilities


(39,556)


(17,749)


(21,807)


-


-


     Depreciation and Amortization


74,269


14,050


56,344


2,189


1,686
















Adjusted Earnings (Losses) before Interest, Taxes, 












   Depreciation and Amortization, Pension ("Adjusted EBITDAP")

$     126,703


$      82,545


$      55,978


$        22,331


$        (34,151)
















Net Sales



$   1,502,341


$     538,206


$    841,757


$       129,149


$         (6,771)
















Adjusted EBITDAP Margin


8.7%


15.9%


6.8%


17.3%


n/a






























-More-

 

 

(Continued)












FINANCIAL DATA  (UNAUDITED)















TRIUMPH GROUP, INC. AND SUBSIDIARIES

(dollars in thousands)















Non-GAAP Financial Measure Disclosures (continued)












Adjusted Earnings before Interest, Taxes,
Depreciation, Amortization and Pension (EBITDAP):




Three Months Ended September 30, 2018





Segment Data






Total


Integrated
Systems


Aerospace
Structures


Product S
upport


Corporate /
Eliminations
















Net Loss



$      (14,676)
























Add-back:













     Non-service defined benefit income


(16,524)










     Income Tax Benefit


485










     Interest Expense and Other


28,714
























Operating (Loss) Income


$        (2,001)


$      39,866


$    (22,744)


$        11,514


$        (30,637)
















     (Gain) loss on sales of assets & businesses


13,118


-


-


-


13,118


     Amortization of Acquired Contract Liabilities


(16,804)


(8,768)


(8,036)


-


-


     Depreciation and Amortization


38,134


7,384


28,294


1,664


792
















Adjusted Earnings (Losses) before Interest, Taxes, 












   Depreciation and Amortization ("Adjusted EBITDAP")


$       32,447


$      38,482


$      (2,486)


$        13,178


$        (13,461)
















Net Sales



$     855,108


$    260,717


$   528,367


$        72,199


$         (6,175)
















Adjusted EBITDAP Margin


3.9%


15.3%


-0.5%


18.3%


n/a






























Adjusted Earnings before Interest, Taxes,
Depreciation, Amortization and Pension (EBITDAP):




Six Months Ended September 30, 2018





Segment Data






Total


Integrated
Systems


Aerospace
Structures


Product
Support


Corporate */
Eliminations
















Net Loss



$      (91,210)
























Add-back:













     Non-service defined benefit income


(33,061)










     Income Tax Expense


1,516










     Interest Expense and Other


54,206
























Operating (Loss) Income 


$      (68,549)


$      75,275


$  (102,331)


$        19,183


$        (60,676)
















     (Gain) loss on sales of assets & businesses


17,837


-


-


-


17,837


     Adoption of ASU 2017-07


87,241


-


87,241


-


-


     Amortization of Acquired Contract Liabilities


(34,038)


(17,617)


(16,421)


-


-


     Depreciation and Amortization


76,945


14,939


57,214


3,334


1,458
















Adjusted Earnings (Losses) before Interest, Taxes, 












   Depreciation and Amortization, Pension ("Adjusted EBITDAP")

$       79,436


$      72,597


$     25,703


$        22,517


$        (41,381)
















Net Sales



$  1,688,008


$    501,756


$ 1,060,753


$       138,414


$        (12,915)
















Adjusted EBITDAP Margin


4.8%


15.0%


2.5%


16.3%


n/a

















*   Operating loss at Corporate includes share-based compensation expense






















-More-

 

 















(Continued)












FINANCIAL DATA  (UNAUDITED)















TRIUMPH GROUP, INC. AND SUBSIDIARIES

(dollars in thousands)















Non-GAAP Financial Measure Disclosures (continued)


























Adjusted income from continuing operations before income taxes, adjusted income from continuing operations and adjusted 

income from continuing operations diluted per share, before non-recurring costs has been provided for consistency and comparability.

These measures should not be considered in isolation or as alternatives to income from continuing operations before income taxes, 

income from continuing operations and income from continuing operations per diluted share presented in accordance with GAAP.  

The following table reconciles income from continuing operations before income taxes, income from continuing operations and 

income from continuing operations per diluted share, before non-recurring costs.




























Three Months Ended










September 30, 2019










Pre-tax


After-tax


Diluted EPS




















Income from Continuing Operations- GAAP


$       54,053


$      42,701


$         0.85






Adjustments:












(Gain) loss on sale of assets and businesses


(7,965)


(6,292)


(0.12)






Curtailment gain & special termination, net


(14,373)


(11,355)


(0.23)






Legal settlement gain, net


(5,400)


(4,266)


(0.08)






Union incentives


5,671


4,480


0.09






Restructuring costs


5,782


4,568


0.09






Refinancing cost


3,030


2,394


0.05




















Adjusted Income from Continuing Operations- non-GAAP


$       40,798


$      32,230


$         0.64






































Six Months Ended










September 30, 2019


FY 20 EPS








Pre-tax


After-tax


Diluted EPS


Guidance Range


















Income from Continuing Operations- GAAP


$       76,948


$      60,789


$         1.21


$1.34 - $2.35




Adjustments:












(Gain) loss on sale of assets and businesses


(4,829)


(3,815)


(0.08)


0.69 - 1.09 




Curtailment gain & special termination, net


(14,373)


(11,355)


(0.23)


(0.23)




Legal settlement gain, net


(5,400)


(4,266)


(0.08)


(0.13) - (0.14)




Union incentives


5,671


4,480


0.09


0.09




Restructuring costs


8,746


6,909


0.14


0.14




Refinancing cost


3,030


2,394


0.05


0.05


















Adjusted Income from Continuing Operations- non-GAAP


$       69,793


$      55,136


$         1.09


$2.35 - $2.95


















-More-
















 

 

(Continued)












FINANCIAL DATA  (UNAUDITED)
















TRIUMPH GROUP, INC. AND SUBSIDIARIES


(dollars in thousands)















Non-GAAP Financial Measure Disclosures (continued)
















Three Months Ended










September 30, 2018










Pre-tax


After-tax


Diluted EPS




















Loss from Continuing Operations- GAAP


$      (14,191)


$     (14,676)


$        (0.30)






Adjustments:












(Gain) loss on sale of assets and businesses


13,118


13,118


0.26






Global 7500 forward loss charge


19,926


17,621


0.35






Reduction of prior Gulfstream forward loss


(7,624)


(6,742)


(0.14)






Restructuring costs


11,832


9,821


0.20






Refinancing costs


1,281


1,063


0.02




















Adjusted Income from Continuing Operations- non-GAAP


$       24,342


$      20,204


$         0.40

*





































Six Months Ended










September 30, 2018










Pre-tax


After-tax


Diluted EPS




















Loss from Continuing Operations- GAAP


$      (89,694)


$     (91,210)


$        (1.84)






Adjustments:












Adoption of ASU 2017-07


87,241


85,474


1.71






(Gain) loss on sale of assets and businesses


17,837


17,837


0.36






Global 7500 forward loss charge


19,926


17,621


0.35






Reduction of prior Gulfstream forward loss


(7,624)


(6,742)


(0.14)






Restructuring costs


15,879


13,180


0.26






Refinancing costs


1,281


1,063


0.02




















Adjusted Income from Continuing Operations- non-GAAP


$       44,846


$      37,222


$         0.75

*



















 

 

(Continued)












FINANCIAL DATA  (UNAUDITED)















TRIUMPH GROUP, INC. AND SUBSIDIARIES

(dollars in thousands)















Non-GAAP Financial Measure Disclosures (continued)















Adjusted Operating Income is defined as GAAP Operating Income, less expenses/gains associated with the Company's transformation, such as restructuring

expenses, gains/losses on divestitures, defined benefit plan gains/losses from curtailments, settlements, etc; impairments of goodwill and other assets.


Management believes that this is useful in evaluating operating performance, but this measure should not be used in isolation.


The following table reconciles our Operating income to Adjusted Operating income as noted above.

























Three Months Ended


Six Months Ended








September 30,


September 30,








2019


2018


2019


2018


Operating Income (Loss) - GAAP




$      61,037


$       (2,001)


$        96,548


$        (68,549)


Adjustments:












Adoption of ASU 2017-07




-


-


-


87,241


(Gain) Loss on sale of assets and businesses




(7,965)


13,118


(4,829)


17,837


Global 7500 forward loss charge




-


19,926


-


19,926


Reduction of prior Gulfstream forward loss




-


(7,624)


-


(7,624)


Restructuring costs




5,782


11,832


8,746


15,879


Legal settlement gain, net




(5,400)


-


(5,400)


-


Union incentives




5,671


-


5,671


-


Adjusted Operating Income-non-GAAP




$      59,125


$      35,251


$       100,736


$         64,710
















Cash provided by operations, is provided for consistency and comparability. We also use free cash flow as a key factor in


planning for and consideration of strategic acquisitions and the repayment of debt. This measure should not be considered in

isolation, as a measure of residual cash flow available for discretionary purposes, or as an alternative to operating results


presented in accordance with GAAP. The following table reconciles cash provided by operations to free cash flow.





















Three Months Ended


Six Months Ended








September 30,


September 30,








2019


2018


2019


2018
















          Cash flow used in operations




$     (15,611)


$   (131,464)


$       (10,593)


$      (197,179)


          Less:












          Capital expenditures




(8,905)


(12,054)


(16,995)


(24,254)
















          Free cash use




$     (24,516)


$   (143,518)


$       (27,588)


$      (221,433)
















The Company provides cash flow guidance on non-GAAP basis adjusting capital expenditures from cash from operations to arrive at free cash flow.



The following table reconciles cash from operations on a GAAP basis to free cash flow guidance.















FY 20 Cash Flow














Guidance Range








          Cash flow from operations




$50,000 - $110,000








          Less:












          Capital expenditures




$50,000 - $60,000






















          Free cash flow




$0 - $50,000






















######

 

 

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SOURCE Triumph Group