Press Release

Triumph Group Reports Third Quarter Fiscal 2020 Results

Reports Organic Revenue Growth of 8%

Generates Solid Free Cash Flow

Company Release - 2/6/2020 6:00 AM ET

BERWYN, Pa., Feb. 5, 2020 /PRNewswire/ -- Triumph Group, Inc. (NYSE: TGI) ("Triumph" or the "Company") today reported financial results for its third quarter of fiscal year 2020, which ended December 31, 2019.

Third Quarter Fiscal 2020

  • Net sales of $704.7 million
  • Operating income of $1.7 million with operating margin of 0.2%; adjusted operating income of $64.0 million with adjusted operating margin of 9.1%
  • Net loss of ($13.8) million, or ($0.27) per share; adjusted net income of $35.4 million, or $0.69 per diluted share
  • Cash flow provided by operations of $49.9 million, and free cash flow of $39.6 million

Outlook for Fiscal 2020

  • Net sales of between $2.8 billion to $2.9 billion
  • GAAP earnings per diluted share of between $1.28 and $1.48
  • Adjusted earnings per diluted share of between $2.35 to $2.55
  • Positive free cash flow of between $0 to $50.0 million

"Triumph Group delivered strong third quarter results, in line with our expectations," stated Daniel J. Crowley, Triumph's president and chief executive officer. "Organic revenue was up year-over-year across all three of our business segments, driven by increased volume on Airbus commercial programs and aftermarket demand for military rotorcraft components and engine mounted accessories.  Integrated Systems margins were driven by increases in MRO and spares sales, as well as improved operational efficiencies and cost reduction initiatives.  Aerospace Structures continued to execute its plan, divesting the Nashville large structures business and exiting legacy programs.  We expect these actions to benefit margins in future quarters."

Mr. Crowley continued, "Free cash flow was positive for the quarter and year to date, and we remain on track to deliver positive free cash flow for fiscal year 2020 as we guided. Triumph is a more predictable business as we de-risk our portfolio and backlog and stabilize our cash flows." 

Mr. Crowley concluded, "We are focused on our core and I remain confident in Triumph's ability to compete, win and create value over the long term for our stakeholders."

737 MAX Update

Boeing and Triumph have agreed that advance repayments will be deferred from Triumph's fiscal fourth quarter and have reached agreement on the rate at which Triumph will continue to manufacture content for the 737 Max program in the near term to protect continuity of supply to Boeing.  The parties also agreed to explore balanced solutions to address a number of business considerations between both companies, including certain fiscal 2021 advance repayments.

Third Quarter Fiscal Year 2020 Overview

After accounting for the impact of the divestitures, sales for the third quarter of fiscal 2020 were up 8% organically from the comparable prior year period.  Growth was driven by increased volumes on Airbus commercial programs, military rotorcraft components, aftermarket accessory services and legacy structures programs.

Third quarter operating income of $1.7 million included a $1.4 million expense for union OPEB related incentives, $60.0 million for loss on divestitures, ($3.9) million for a legal judgment gain and $4.7 million of restructuring costs.  Net loss for the third quarter of fiscal year 2020 was ($13.8) million, or ($0.27) per share.  On an adjusted basis, net income was $35.4 million, or $0.69 per diluted share. 

Triumph's results included the following: 

 ($ millions except EPS)


Pre-tax



After-tax



Diluted EPS


Loss from Continuing Operations - GAAP


$

(17.5)



$

(13.8)



$

(0.27)


Loss on sale of assets and businesses



60.0




47.4




0.93


Legal judgment gain, net



(3.9)




(3.0)




(0.06)


Union incentives



1.4




1.1




0.02


Transformation related costs:













Restructuring costs (cash)



4.7




3.7




0.07


Adjusted Income from Continuing Operations - non-GAAP *


$

44.8



$

35.4



$

0.69


* Differences due to rounding

The number of shares used in computing diluted earnings per share for the third quarter of 2020 was 51.0 million.

Backlog was $3.34 billion, down compared to the prior year period and on a sequential basis due to divestitures, sunsetting programs and recent production rate reductions, but partially offset by military program increases in Integrated Systems. 

For the nine months ended December 31, 2019, cash flow provided by operations was $39.3 million, reflecting continued investment in ramping programs and liquidation of approximately $60.0 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 now expects the FY20 revenue impact from the reduction in rates from the beginning of the year to be less than 3% of sales with similar impacts to operating income and cash.

Based on anticipated aircraft production rates and including the timing 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 has narrowed its expected GAAP fiscal year 2020 earnings per diluted share from a range of $1.34 to $2.35 to a range of $1.28 to $1.48 and adjusted earning per diluted share from a range of $2.35 to $2.95 to a range of $2.35 to $2.55. 

The Company has updated is expected fiscal year 2020 cash provided from operations from a range of $50.0 million to $110.0 million to a range of $40.0 million to $100.0 million. The Company continues to expect positive free cash flow of $0 to $50.0 million in fiscal year 2020.   

The Company's current outlook reflects the divestiture of its Nashville business, planned 737MAX production rates and adjustments detailed in the attached tables but excludes the impact of any potential future divestitures. 

Conference Call 

Triumph will hold a conference call today, February 6th, at 8:30 a.m. (ET) to discuss the third 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, and the presentation has been posted on the Company's website at http://ir.triumphgroup.com/QuarterlyResults. An audio replay will be available from February 6th to February 13th by calling (855) 859-2056 (Domestic) or (404) 537-3406 (International), passcode #1487806.

About Triumph 

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

December 31,



Nine Months Ended

December 31,


CONDENSED STATEMENTS OF OPERATIONS


2019



2018



2019



2018


Net sales


$

704,666



$

807,895



$

2,207,007



$

2,495,903


Cost of sales (excluding depreciation shown below)



546,282




713,274




1,750,751




2,207,962


Selling, general & administrative



65,974




71,823




194,512




223,031


Depreciation & amortization



29,843




37,404




104,112




114,349


Restructuring costs



4,744




2,327




13,490




18,206


Legal judgment gain, net of expenses



(3,857)







(9,257)





Loss on sale of assets and businesses, net



60,019







55,190




17,837


Operating income (loss)



1,661




(16,933)




98,209




(85,482)


Interest expense and other, net



33,178




29,309




96,069




83,515


Non-service defined benefit income



(13,989)




(16,520)




(57,280)




(49,581)


Income tax (benefit) expense



(3,682)




1,223




12,477




2,739


Net (loss) income


$

(13,846)



$

(30,945)



$

46,943



$

(122,155)


Earnings per share - basic:

















Net (loss) income


$

(0.27)



$

(0.62)



$

0.94



$

(2.46)


Weighted average common shares outstanding - basic



50,395




49,668




50,074




49,616


Earnings per share - diluted:

















Net (loss) income


$

(0.27)



$

(0.62)



$

0.93



$

(2.46)


Weighted average common shares outstanding - diluted



50,395




49,668




50,591




49,616


Dividends declared and paid per common share


$

0.04



$

0.04



$

0.12



$

0.12


 

(Continued)

FINANCIAL DATA (UNAUDITED)


TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except share data)


BALANCE SHEETS


Unaudited

December 31,

2019



Audited

March 31,

2019


Assets









Cash and cash equivalents


$

53,594



$

92,807


Accounts receivable, net



300,730




373,590


Contract assets



241,875




326,667


Inventory, net



473,863




413,560


Prepaid and other current assets



26,133




34,446


Current assets



1,096,195




1,241,070


Property and equipment, net



433,475




543,710


Goodwill



583,699




583,225


Intangible assets, net



394,782




430,954


Other, net



117,235




55,615


Total assets


$

2,625,386



$

2,854,574


Liabilities & Stockholders' Deficit









Current portion of long-term debt


$

7,795



$

8,201


Accounts payable



379,989




433,783


Contract liabilities



264,463




293,719


Accrued expenses



231,065




239,572


Current liabilities



883,312




975,275


Long-term debt, less current portion



1,400,893




1,480,620


Accrued pension and post-retirement benefits, noncurrent



496,284




540,479


Deferred income taxes, noncurrent



16,709




6,964


Other noncurrent liabilities



361,085




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



804,133




867,545


Treasury stock, at cost, 631,146 and 2,573,652 shares



(38,424)




(159,154)


Accumulated other comprehensive loss



(545,299)




(487,684)


Accumulated deficit



(753,359)




(794,072)


Total stockholders' deficit



(532,897)




(573,313)


Total liabilities and stockholders' deficit


$

2,625,386



$

2,854,574


 

(Continued)

FINANCIAL DATA (UNAUDITED)


TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except share data)




Nine Months Ended

December 31,


CASH FLOWS


2019



2018


Operating Activities









Net income (loss)


$

46,943



$

(122,155)


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









Depreciation & amortization



104,112




114,349


Amortization of acquired contract liabilities



(56,153)




(48,769)


Loss on sale of assets & businesses, net



55,190




17,837


Curtailment and special termination benefit gain, net



(14,373)





Other amortization included in interest expense



9,114




6,811


Provision for doubtful accounts receivable



632




622


Provision for deferred income taxes



8,108





Employee stock-based compensation



8,245




8,509


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









Trade and other receivables



72,278




8,669


Contract assets



53,047




6,240


Inventories



(67,764)




(61,563)


Prepaid expenses and other current assets



11,315




1,615


Accounts payable, accrued expenses and contract liabilities



(143,718)




(72,639)


Accrued pension and other postretirement benefits



(46,693)




(55,150)


Other



(995)




2,508


Net cash provided by (used in) operating activities



39,288




(193,116)


Investing Activities









Capital expenditures



(27,250)




(34,824)


Proceeds from sale of assets



49,956




41,417


Net cash provided by investing activities



22,706




6,593


Financing Activities









Net (decrease) increase in revolving credit facility



(215,000)




218,066


Proceeds from issuance of long-term debt and finance leases



570,980




45,000


Repayment of debt and finance lease obligations



(433,197)




(73,011)


Payment of deferred financing costs



(17,545)




(1,941)


Dividends paid



(6,005)




(5,975)


Repurchase of restricted shares for minimum tax obligation



(1,179)




(645)


Net cash (used in) provided by financing activities



(101,946)




181,494


Effect of exchange rate changes on cash



739




(2,126)


Net change in cash



(39,213)




(7,155)


Cash and equivalents at beginning of period



92,807




35,819


Cash and equivalents at end of period


$

53,594



$

28,664


 

 

(Continued)

FINANCIAL DATA (UNAUDITED)


TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)




Three Months Ended



Nine Months Ended




December 31,



December 31,


SEGMENT DATA


2019



2018



2019



2018


Net sales:

















Integrated Systems


$

275,248



$

252,437



$

813,454



$

754,193


Aerospace Structures



368,972




490,337




1,210,729




1,551,090


Product Support



63,978




71,446




193,127




209,860


Elimination of inter-segment sales



(3,532)




(6,325)




(10,303)




(19,240)




$

704,666



$

807,895



$

2,207,007



$

2,495,903


Operating income (loss):

















Integrated Systems


$

47,896



$

39,947



$

134,140



$

115,221


Aerospace Structures



18,039




(49,813)




43,930




(152,143)


Product Support



9,538




11,421




29,680




30,604


Corporate



(70,857)




(15,222)




(101,296)




(70,655)


Share-based compensation expense



(2,955)




(3,266)




(8,245)




(8,509)




$

1,661



$

(16,933)



$

98,209



$

(85,482)


Operating margin %

















Integrated Systems



17.4

%



15.8

%



16.5

%



15.3

%

Aerospace Structures



4.9

%



(10.2)

%



3.6

%



(9.8)

%

Product Support



14.9

%



16.0

%



15.4

%



14.6

%

Consolidated



0.2

%



(2.1)

%



4.4

%



(3.4)

%


















Depreciation and amortization:

















Integrated Systems


$

6,992



$

7,376



$

21,042



$

22,316


Aerospace Structures



20,921




27,673




77,265




84,888


Product Support



1,083




1,611




3,272




4,944


Corporate



847




744




2,533




2,201




$

29,843



$

37,404



$

104,112



$

114,349


Amortization of acquired contract liabilities:

















Integrated Systems


$

(8,377)



$

(8,172)



$

(26,126)



$

(25,789)


Aerospace Structures



(8,220)




(6,559)




(30,027)




(22,980)




$

(16,597)



$

(14,731)



$

(56,153)



$

(48,769)


Capital expenditures:

















Integrated Systems


$

2,974



$

3,951



$

9,734



$

9,388


Aerospace Structures



5,910




5,722




13,915




22,937


Product Support



955




852




2,621




1,871


Corporate



416




45




980




628




$

10,255



$

10,570



$

27,250



$

34,824


 

(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 provide 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.



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.

 

(Continued)

FINANCIAL DATA (UNAUDITED)


TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)


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




Three Months Ended



Nine Months Ended




December 31,



December 31,


Adjusted Earnings before Interest, Taxes, Depreciation,

Amortization, and Pension (Adjusted EBITDAP):


2019



2018



2019



2018


Net (loss) income


$

(13,846)



$

(30,945)



$

46,943



$

(122,155)


Add-back:

















Income tax (benefit) expense



(3,682)




1,223




12,477




2,739


Interest expense and other, net



33,178




29,309




96,069




83,515


Curtailment gain & special termination, net









(14,373)





Union incentives



1,400







7,071





Loss on sales of assets and businesses, net



60,019







55,190




17,837


Legal judgment gain, net of expenses



(3,857)







(9,257)





Adoption of ASU 2017-07












87,241


Amortization of acquired contract liabilities



(16,597)




(14,731)




(56,153)




(48,769)


Depreciation and amortization



29,843




37,404




104,112




114,349


Adjusted Earnings before Interest, Taxes, Depreciation

   and Amortization ("Adjusted EBITDA")


$

86,458



$

22,260



$

242,079



$

134,757


Non-service defined benefit income (excluding settlements)



(13,989)




(16,520)




(42,907)




(49,581)


Adjusted Earnings before Interest, Taxes, Depreciation

   and Amortization, and Pension ("Adjusted EBITDAP")


$

72,469



$

5,740



$

199,172



$

85,176


Net sales


$

704,666



$

807,895



$

2,207,007



$

2,495,903


Net (loss) income margin



(2.0)

%



(3.8)

%



2.1

%



(4.9)

%

Adjusted EBITDAP margin



10.5

%



0.7

%



9.3

%



3.5

%

 

(Continued)

FINANCIAL DATA (UNAUDITED)


TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)


Non-GAAP Financial Measure Disclosures (continued)




Three Months Ended December 31, 2019








Segment Data


Adjusted Earnings before Interest, Taxes, Depreciation,

Amortization, and Pension (EBITDAP):


Total



Integrated

Systems



Aerospace

Structures



Product

Support



Corporate/

Eliminations*


Net loss


$

(13,846)


















Add-back:





















Non-service defined benefit income



(13,989)


















Income tax expense



(3,682)


















Interest expense and other, net



33,178


















Operating income (loss)


$

1,661



$

47,896



$

18,039



$

9,538



$

(73,812)


Loss on sales of assets & businesses, net



60,019













60,019


Legal settlement gain, net of expenses



(3,857)













(3,857)


Union represented employee incentives



1,400







1,400








Amortization of acquired contract liabilities



(16,597)




(8,377)




(8,220)








Depreciation and amortization



29,843




6,992




20,921




1,083




847


Adjusted Earnings (Losses) before Interest, Taxes,

   Depreciation and Amortization, and Pension

   ("Adjusted EBITDAP")


$

72,469



$

46,511



$

32,140



$

10,621



$

(16,803)


  Net sales


$

704,666



$

275,248



$

368,972



$

63,978



$

(3,532)


  Adjusted EBITDAP margin



10.5

%



17.4

%



8.9

%



16.6

%


n/a


 



Nine Months Ended December 31, 2019








Segment Data


Adjusted Earnings before Interest, Taxes, Depreciation,

Amortization, and Pension (EBITDAP):


Total



Integrated

Systems



Aerospace

Structures



Product

Support



Corporate/

Eliminations*


Net income


$

46,943


















Add-back:





















Non-service defined benefit income



(57,280)


















Income tax expense



12,477


















Interest expense and other, net



96,069


















Operating income (loss)


$

98,209



$

134,140



$

43,930



$

29,680



$

(109,541)


Loss (gain) on sales of assets & businesses, net



55,190







(10,121)







65,311


Legal judgment gain, net of expenses



(9,257)













(9,257)


Union represented employee incentives



7,071







7,071








Amortization of acquired contract liabilities



(56,153)




(26,126)




(30,027)








Depreciation and amortization



104,112




21,042




77,265




3,272




2,533


Adjusted Earnings (Losses) before Interest, Taxes,

   Depreciation and Amortization, and Pension

   ("Adjusted EBITDAP")


$

199,172



$

129,056



$

88,118



$

32,952



$

(50,954)


  Net sales


$

2,207,007



$

813,454



$

1,210,729



$

193,127



$

(10,303)


  Adjusted EBITDAP margin



9.3

%



16.4

%



7.5

%



17.1

%


n/a


 

(Continued)

FINANCIAL DATA (UNAUDITED)


TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)


Non-GAAP Financial Measure Disclosures (continued)



Three Months Ended December 31, 2018








Segment Data


Adjusted Earnings before Interest, Taxes, Depreciation,

Amortization, and Pension (EBITDAP):


Total



Integrated

Systems



Aerospace

Structures



Product

Support



Corporate/

Eliminations*


Net loss


$

(30,945)


















Add-back:





















Non-service defined benefit income



(16,520)


















Income tax expense



1,223


















Interest expense and other, net



29,309


















Operating (loss) income


$

(16,933)



$

39,947



$

(49,813)



$

11,421



$

(18,488)


Amortization of acquired contract liabilities



(14,731)




(8,172)




(6,559)








Depreciation and amortization



37,404




7,376




27,673




1,611




744


Adjusted Earnings (Losses) before Interest, Taxes,

   Depreciation and Amortization, and Pension

   ("Adjusted EBITDAP")


$

5,740



$

39,151



$

(28,699)



$

13,032



$

(17,744)


  Net sales


$

807,895



$

252,437



$

490,337



$

71,446



$

(6,325)


  Adjusted EBITDAP margin



0.7

%



16.0

%



(5.9)

%



18.2

%


n/a


 



Nine Months Ended December 31, 2018








Segment Data


Adjusted Earnings before Interest, Taxes, Depreciation,

Amortization, and Pension (EBITDAP):


Total



Integrated

Systems



Aerospace

Structures



Product

Support



Corporate/

Eliminations*


Net loss


$

(122,155)


















Add-back:





















Non-service defined benefit income



(49,581)


















Income tax expense



2,739


















Interest expense and other, net



83,515


















Operating (loss) income


$

(85,482)



$

115,221



$

(152,143)



$

30,604



$

(79,164)


Loss on sales of assets & businesses, net



17,837













17,837


Adoption of ASU 2017-07



87,241







87,241








Amortization of acquired contract liabilities



(48,769)




(25,789)




(22,980)








Depreciation and amortization



114,349




22,316




84,888




4,944




2,201


Adjusted Earnings (Losses) before Interest,

   Taxes, Depreciation and Amortization,

   and Pension ("Adjusted EBITDAP")


$

85,176



$

111,748



$

(2,994)



$

35,548



$

(59,126)


 Net sales


$

2,495,903



$

754,193



$

1,551,090



$

209,860



$

(19,240)


 Adjusted EBITDAP margin



3.5

%



15.3

%



(0.2)

%



16.9

%


n/a



*              Operating loss at Corporate includes share-based compensation expense.

 

(Continued)

FINANCIAL DATA (UNAUDITED)


TRIUMPH GROUP, INC. AND SUBSIDIARIES

(dollars in thousands, except per share data)


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 per diluted share, before non-recurring costs have 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 tables reconcile 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

December 31, 2019




Pre-Tax



After-Tax



Diluted EPS


Loss from continuing operations - GAAP


$

(17,528)



$

(13,846)



$

(0.27)


Adjustments:













Loss on sale of assets and businesses, net



60,019




47,415




0.93


Legal judgment gain, net of expenses



(3,857)




(3,047)




(0.06)


Union incentives



1,400




1,106




0.02


Restructuring costs



4,744




3,748




0.07


Adjusted income from continuing operations - non-GAAP


$

44,778



$

35,376



$

0.69


 



Nine Months Ended

December 31, 2019




Pre-Tax



After-Tax



Diluted EPS



FY20 EPS

Guidance Range


Income from continuing operations - GAAP


$

59,420



$

46,943



$

0.93



$1.28 - $1.48


Adjustments:

















Loss on sale of assets and businesses, net



55,190




43,600




0.86




1.07


Curtailment gain & special termination gain, net



(14,373)




(11,355)




(0.22)




(0.28)


Legal settlement gain, net of expenses



(9,257)




(7,313)




(0.14)




(0.18)


Union incentives



7,071




5,586




0.11




0.14


Restructuring costs



13,490




10,657




0.21




0.26


Refinancing cost



3,030




2,394




0.05




0.06


Adjusted income from continuing operations - non-GAAP*


$

114,571



$

90,512



$

1.79



$2.35 - $2.55



* Differences due to rounding

 



Three Months Ended

December 31, 2018




Pre-Tax



After-Tax



Diluted EPS


Loss from continuing operations - GAAP


$

(29,722)



$

(30,945)



$

(0.62)


Adjustments:













Global 7500 forward loss charge



40,498




40,498




0.81


E2 Jet program forward loss charge



9,162




7,604




0.15


G280 program forward loss charge



2,516




2,088




0.04


Restructuring costs



2,327




1,891




0.04


Adjusted income from continuing operations - non-GAAP


$

24,781



$

21,136



$

0.42


 

(Continued)

FINANCIAL DATA (UNAUDITED)


TRIUMPH GROUP, INC. AND SUBSIDIARIES

(dollars in thousands, except per share data)


Non-GAAP Financial Measure Disclosures (continued)




Nine Months Ended

December 31, 2018




Pre-Tax



After-Tax



Diluted EPS


Loss from continuing operations - GAAP


$

(119,416)



$

(122,155)



$

(2.46)


Adjustments:













Adoption of ASU 2017-07



87,241




85,474




1.71


Loss on sale of assets and businesses, net



17,837




17,837




0.36


Global 7500 forward loss charge



60,424




57,664




1.16


E2 Jet program forward loss charge



9,162




7,604




0.15


G280 program forward loss charge



2,516




2,088




0.04


Reduction of prior Gulfstream forward loss



(7,624)




(6,328)




(0.13)


Restructuring costs



18,206




15,111




0.30


Refinancing costs



1,281




1,063




0.02


Adjusted income from continuing operations - non-GAAP*


$

69,627



$

58,358



$

1.17



* Differences due to rounding

 

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



Nine Months Ended




December 31,

2019



December 31,

2018



December 31,

2019



December 31,

2018


Operating income (loss) - GAAP


$

1,661



$

(16,933)



$

98,209



$

(85,482)


Adjustments:

















Adoption of ASU 2017-07












87,241


Loss on sale of assets and businesses, net



60,019







55,190




17,837


Global 7500 forward loss charge






40,498







60,424


E2 Jet program forward loss charge






9,162







9,162


G280 program forward loss charge






2,516







2,516


Reduction of prior Gulfstream forward loss












(7,624)


Restructuring costs



4,744




2,327




13,490




18,206


Legal judgment gain, net of expenses



(3,857)







(9,257)





Union incentives



1,400







7,071





Adjusted operating income - non-GAAP


$

63,967



$

37,570



$

164,703



$

102,280


 

(Continued)

FINANCIAL DATA (UNAUDITED)


(dollars in thousands, except per share data)
TRIUMPH GROUP, INC. AND SUBSIDIARIES


Non-GAAP Financial Measure Disclosures (continued)


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

December 31,



Nine Months Ended

December 31,




2019



2018



2019



2018


Cash flow (provided by) used in operations


$

49,881



$

4,063



$

39,288



$

(193,116)


Less:

















Capital expenditures



(10,255)




(10,570)




(27,250)




(34,824)


Free cash flow (use)


$

39,626



$

(6,507)



$

12,038



$

(227,940)


 

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.




FY20 Cash Flow

Guidance Range

Cash flow from operations


$40,000 - $100,000

Less:



Capital expenditures


$40,000 - $50,000

Free cash flow


$0 - $50,000

 

 

Cision View original content:http://www.prnewswire.com/news-releases/triumph-group-reports-third-quarter-fiscal-2020-results-301000199.html

SOURCE Triumph Group