Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
 
FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported): August 8, 2018
 
TRIUMPH GROUP, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
1-12235
 
51-0347963
(State or other jurisdiction of
incorporation)
 
(Commission File Number)
 
(IRS Employer Identification
No.)
 
 
 
 
 
899 Cassatt Road, Suite 210
 
19312
Berwyn, Pennsylvania
 
(Zip Code)
(Address of principal executive offices)
 
 
 
(610) 251-1000
(Registrant's telephone number, including area code)
 
Not Applicable
(Former name or former address, if changed since last report.)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o







Item 2.02
 
Results of Operations and Financial Condition.
 
On August 8, 2018, Triumph Group, Inc. issued a press release announcing its financial results for the fiscal quarter ended June 30, 2018, and will conduct a conference call to further discuss the financial results.  The full text of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Item 7.01
 
Regulation FD Disclosure

On the conference call referenced in Item 2.02 above, certain information will be presented. The information to be presented during such conference call is attached as Exhibit 99.2 to this Current Report on Form 8-K.
The information in this Item 7.01 of this Current Report on Form 8-K and Exhibit 99.2 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

 `
Item 9.01
 
Financial Statements and Exhibits.
 
 
 
(d)       
 
Exhibits.
 
Exhibit No.
 
Description
 
 
 
 
 








Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Date:
August 8, 2018
TRIUMPH GROUP, INC.
 
 
 
 
 
 
By:
/s/ Thomas A. Quigley, III
 
 
 
Thomas A. Quigley, III
 
 
 
Vice President and Controller




Exhibit


Exhibit 99.1
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12396006&doc=30    

NEWS RELEASE                     
Media Contact:                                Investor Relations Contact:
Michele Long                                Sheila Spagnolo
Phone (610) 251-1000                            Phone (610) 251-1000
mmlong@triumphgroup.com                        sspagnolo@triumphgroup.com



TRIUMPH GROUP REPORTS FIRST QUARTER FISCAL 2019 RESULTS



BERWYN, Pa. - August 8, 2018 - Triumph Group, Inc. (NYSE: TGI) (“Triumph” or the “Company”) today reported financial results for its first quarter of fiscal year 2019, which ended June 30, 2018.

First Quarter 2019 Highlights

Net sales were $832.9 million.
Operating loss was ($66.5) million, which includes the non-cash ASU 2017-07 pension adjustment of ($87.2) million. On an adjusted basis, operating income was $29.5 million with an adjusted operating margin of 3.5%.
Net loss was ($76.5) million, or ($1.54) per share. On an adjusted basis, net income was $17.0 million, or $0.34 per diluted share.
Cash used in operations was ($65.7) million, and free cash use was ($77.9) million.
Guidance for fiscal 2019 for net sales of $3.3 to $3.4 billion and earnings per share of ($0.55) to $0.15, or $1.50 to $2.10 per diluted share on an adjusted basis.
Management provides guidance for cash used from operations of ($150.0) to ($190.0) million and free cash use of ($200.0) to ($250.0) million, which includes approximately ($180.0) million related to the reduction in prior year customer advances, and approximately ($130.0) million related to the Global 7500 program.
“Triumph’s first quarter results demonstrate our continued progress towards achieving our financial performance targets,” stated Daniel J. Crowley, Triumph’s president and chief executive officer. “Consistent with our projections for fiscal 2019, we delivered a year-over-year increase in net sales, with all three business segments generating organic sales growth.”
Mr. Crowley continued, “Our first quarter cash usage was consistent with our expectations and showed both year-over-year and sequential improvement. Excluding the cash consumed by the Global 7500 program and the liquidation of prior year customer advances, free cash flow was positive in the first quarter.”

1



Mr. Crowley continued, “We expect to use significantly less cash for Aerospace Structures’ programs in fiscal 2019 and fiscal 2020 compared to the two prior years. Our fiscal 2019 cash guidance reflects the improvements the Company has made operationally and in contract negotiations over the past two years and is another waypoint towards consistent positive cash flow. Our continued portfolio reshaping in the first quarter included agreements to divest two non-core businesses, in addition to completing a third divestiture following the end of the quarter, which we expect to further enhance our future profitability and cash flow. Additional divestitures are planned for the second half of FY19.”


First Quarter Fiscal Year 2019 Overview

After accounting for divestitures and the impact of the adoption of ASC 606, sales for the first quarter of fiscal 2019 were up 3% organically from the comparable prior year period. Sales growth was driven by the ramp on the Global 7500 as well as increased rotorcraft deliveries and higher demand for structural component repairs.
First quarter operating loss of ($66.5) million included a previously disclosed $87.2 million non-cash pension charge related to the adoption of the new FASB accounting standard update, ASU 2017-07. Net loss for the first quarter of fiscal year 2019 was ($76.5) million, or ($1.54) per share. On an adjusted basis, net income was $17.0 million, or $0.34 per diluted share. Triumph’s results included the following:

($ millions except EPS)
 
      Pre-tax
 
    After-tax
 
Diluted EPS
 
Loss from Continuing Operations - GAAP
 
$
(75.5
)
 
$
(76.5
)
 
$
(1.54
)
 
 
 
 
 
 
 
 
 
Adoption of ASU 2017-07
 
87.2

 
85.5

 
1.72

 
Loss on Assets Held for Sale
 
4.7

 
4.7

 
0.09

 
Transformation related costs:
 
 
 
 
 
 
 
Restructuring costs (cash)
 
4.0

 
3.4

 
0.07

 
 
 
 
 
 
 
 
 
Adjusted Income from Continuing Operations - non-GAAP
 
$
20.5

 
$
17.0

 
$
0.34

*
  *Difference due to rounding
 
 
 
 
 
 
 

The number of shares used in computing diluted earnings per share for the first quarter of fiscal year 2019 was 49.8 million.
Backlog was $4.4 billion, a 5% increase from the prior year period and down slightly on a sequential basis reflecting increased selectivity in pursuing new awards based on projected profitability and cash flow and the non-linear nature of order timing.
For the quarter ended June 30, 2018, cash flow used in operations was ($65.7) million, reflecting approximately ($53.0) million for the liquidation of customer advances and approximately ($81.0) million of cash used on the Global 7500 program.








2




Outlook
Based on anticipated aircraft production rates and completed divestitures, the Company continues to expect that net sales for fiscal year 2019 will be approximately $3.3 to $3.4 billion, up from fiscal 2018 as development programs enter production, and sales from continuing programs and new wins offset waning programs. The Company expects fiscal year 2019 earnings per share to be ($0.55) to $0.15, or $1.50 to $2.10 per diluted share, adjusted for pension accounting changes, transformation related costs and loss on assets held for sale.
The Company expects fiscal year 2019 cash used in operations of ($150.0) to ($190.0) million, and free cash use of ($200.0) to ($250.0) million, which includes approximately ($180.0) million related to the liquidation of customer advances received in fiscal 2017 and 2018, and approximately ($130.0) million of cash use related to the Global 7500 program.
The Company’s current outlook reflects adjustments detailed in the attached tables but does not take into account the impact of any potential future divestitures.
Conference Call
Triumph Group will hold a conference call today, August 8th at 8:30 a.m. (ET) to discuss the first quarter fiscal year 2019 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. An audio replay will be available from August 8th to August 15th by calling (855) 859-2056 (Domestic) or (404) 537-3406 (International), passcode #2361117.
About Triumph Group
Triumph Group, Inc., headquartered in Berwyn, Pennsylvania, designs, engineers, manufactures, repairs and overhauls a broad portfolio of aircraft structures, components, accessories, subassemblies and systems. The Company serves a broad, worldwide spectrum of the aviation industry, including original equipment manufacturers of commercial, regional, business and military aircraft and aircraft components, as well as commercial and regional airlines and air cargo carriers.
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, 2018.

FINANCIAL DATA (UNAUDITED) ON FOLLOWING PAGES



3



FINANCIAL DATA (UNAUDITED)

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

 
 
Three Months Ended
 
 
June 30,
CONDENSED STATEMENTS OF INCOME
 
2018
 
2017
 
 
 
 
 
Net sales
 
$
832,900

 
$
781,689

 
 
 
 
 
Operating loss
 
(66,548
)
 
(968
)
 
 
 
 
 
Interest expense and other
 
25,493

 
21,018

Non-service defined benefit income
 
(16,538
)
 
(19,377
)
Income tax expense (benefit)
 
1,031

 
(678
)
 
 
 
 
 
Net loss
 
$
(76,534
)
 
$
(1,931
)
 
 
 
 
 
Earnings per share - basic:
 
 
 
 
 
 
 
 
 
Net loss
 
$
(1.54
)
 
$
(0.04
)
 
 
 
 
 
Weighted average common shares outstanding - basic
 
49,552

 
49,341

 
 
 
 
 
Earnings per share - diluted:
 
 
 
 
 
 
 
 
 
Net loss
 
$
(1.54
)
 
$
(0.04
)
 
 
 
 
 
Weighted average common shares outstanding - diluted
 
49,552

 
49,341

 
 
 
 
 
Dividends declared and paid per common share
 
$
0.04

 
$
0.04

* The fiscal period ended June 30, 2017 has been adjusted for ASU 2001-07 (Defined Benefit Plans)
 
 
 
 







4



(Continued)
 FINANCIAL DATA (UNAUDITED)
 
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except share data)
 
BALANCE SHEET
 
Unaudited
 
Audited
 
 
June 30,
 
March 31,
 
 
2018
 
2018
Assets
 
 
 
 
Cash and cash equivalents
 
$
33,055

 
$
35,819

Accounts receivable, net
 
337,245

 
376,612

Contract assets
 
537,332

 
37,573

Inventories, net of unliquidated progress payments of $0 and $387,146
 
533,982

 
1,427,169

Prepaid and other current assets
 
30,753

 
44,428

Assets held for sale
 
80,719

 
1,324

   Current assets
 
1,553,086

 
1,922,925

 
 
 
 
 
Property and equipment, net
 
732,300

 
726,003

Goodwill
 
587,571

 
592,828

Intangible assets, net
 
493,105

 
507,681

Other, net
 
53,905

 
57,627

 
 
 
 
 
Total assets
 
$
3,419,967

 
$
3,807,064

 
 
 
 
 
Liabilities & Stockholders' (Deficit) Equity
 
 
 
 
Current portion of long-term debt
 
$
16,710

 
$
16,527

Accounts payable
 
514,907

 
418,367

Contract liabilities
 
474,644

 
321,191

Accrued expenses
 
225,093

 
235,914

Liabilities related to assets held for sale
 
29,588

 
440

Current liabilities
 
1,260,942

 
992,439

 
 
 
 
 
Long-term debt, less current portion
 
1,503,664

 
1,421,757

Accrued pension and post-retirement benefits, noncurrent
 
465,595

 
483,887

Deferred income taxes, noncurrent
 
16,175

 
16,582

Other noncurrent liabilities
 
400,172

 
441,865

 
 
 
 
 
Stockholders' (Deficit) Equity:
 
 
 
 
Common stock, $.001 par value, 100,000,000 shares authorized, 52,460,920 and 52,460,920 shares issued; 49,764,360 and 49,669,848 shares outstanding
 
51

 
51

Capital in excess of par value
 
850,552

 
851,280

Treasury stock, at cost, 2,696,560 and 2,791,072 shares
 
(176,038
)
 
(179,082
)
Accumulated other comprehensive loss
 
(383,828
)
 
(367,870
)
(Accumulated deficit) retained earnings
 
(517,318
)
 
146,155

Total stockholders' (deficit) equity
 
(226,581
)
 
450,534

 
 
 
 
 
Total liabilities and stockholders' (deficit) equity
 
$
3,419,967

 
$
3,807,064









(Continued)
 FINANCIAL DATA (UNAUDITED)
 
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
SEGMENT DATA
 
Three Months Ended
 
 
June 30,
 
 
2018
 
2017
Net Sales:
 
 
 
 
Integrated Systems
 
$
241,039

 
$
238,136

Aerospace Structures
 
532,387

 
483,314

Product Support
 
66,215

 
66,433

Elimination of inter-segment sales
 
(6,741
)
 
(6,194
)
 
 
$
832,900

 
$
781,689

 
 
 
 
 
Operating (Loss) Income:
 
 
 
 
Integrated Systems
 
$
35,409

 
$
46,982

Aerospace Structures
 
(79,587
)
 
(22,488
)
Product Support
 
7,669

 
8,437

Corporate
 
(30,039
)
 
(33,899
)
 
 
$
(66,548
)
 
$
(968
)
 
 
 
 
 
Operating Margin %
 
 
 
 
Integrated Systems
 
14.7
 %
 
19.7
 %
Aerospace Structures
 
(14.9
)%
 
(4.7
)%
Product Support
 
11.6
 %
 
12.7
 %
Consolidated
 
(8.0
)%
 
(0.1
)%
 
 
 
 
 
Depreciation and Amortization:
 
 
 
 
Integrated Systems
 
$
7,555

 
$
9,951

Aerospace Structures
 
28,920

 
27,140

Product Support
 
1,670

 
1,738

Corporate
 
667

 
302

 
 
$
38,812

 
$
39,131

 
 
 
 
 
Amortization of Acquired Contract Liabilities:
 
 
 
 
Integrated Systems
 
$
(8,849
)
 
$
(7,303
)
Aerospace Structures
 
(8,385
)
 
(22,170
)
 
 
$
(17,234
)
 
$
(29,473
)
 
 
 
 
 
Capital Expenditures:
 
 
 
 
Integrated Systems
 
$
1,609

 
$
2,565

Aerospace Structures
 
10,138

 
8,479

Product Support
 
348

 
261

Corporate
 
105

 
780

 
 
$
12,200

 
$
12,085

 
 
 
 
 
* The fiscal period ended June 30, 2017 has been adjusted for ASU 2001-07 (Defined Benefit Plans)

 
 
 
 


6



(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 the Securities and Exchange Commission (“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 measures that we disclose are Adjusted EBITDA and Adjusted EBITDAP. Adjusted EBITDA is our net income before interest, income taxes, amortization of acquired contract liabilities, curtailments, settlements and early retirement incentives, legal settlements, depreciation and amortization. Adjusted EBITDAP is Adjusted EBITDA less pension & other post-retirement benefits. We disclose Adjusted EBITDA and Adjusted EBITDAP on a consolidated basis and Adjusted EBITDAP on 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 measures 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 measures, 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.
 
Adjusted EBITDA and Adjusted EBITDAP are 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 disclosures of Adjusted EBITDA and Adjusted EBITDAP help investors meaningfully evaluate and compare our performance from quarter to quarter and from year to year. We also believe Adjusted EBITDA and Adjusted EBITDAP are measures 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 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.



7



(Continued)
FINANCIAL DATA (UNAUDITED)
 
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
 
Non-GAAP Financial Measure Disclosures (continued)

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 gains or losses 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.



8



(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
 
 
June 30,
 
 
2018
 
2017
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA):
 
 
 
 
Net Loss
 
$
(76,534
)
 
$
(1,931
)
 
 
 
 
 
Add-back:
 
 
 
 
     Income tax expense (benefit)
 
1,031

 
(678
)
     Interest expense and other
 
25,493

 
21,018

   Loss on assets held for sale
 
4,719

 

Adoption of ASU 2017-07
 
87,241

 

     Amortization of acquired contract liabilities
 
(17,234
)
 
(29,473
)
     Depreciation and amortization
 
38,812

 
39,131

 
 
 
 
 
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")
 
$
63,528

 
$
28,067

 
 
 
 
 
     Non-service defined benefit income
 
(16,538
)
 
(19,377
)
 
 
 
 
 
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization, and Pension ("Adjusted EBITDAP")
 
$
46,990

 
$
8,690

 
 
 
 
 
Net Sales #
 
$
832,900

 
$
781,689

 
 
 
 
 
Net Loss Margin
 
(9.2
)%
 
(0.2
)%
 
 
 
 
 
Adjusted EBITDAP Margin #
 
5.8
 %
 
1.2
 %
 
 
 
 
 
# Net Sales includes Amortization of Acquired Contract Liabilities. Since Adjusted EBITDA excludes Amortization of Acquired
   Contract Liabilities, we've also excluded it from Net Sales in arriving at Adjusted EBITDA margin throughout this document.




9



(Continued)
 FINANCIAL DATA (UNAUDITED)
 
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)

Non-GAAP Financial Measure Disclosures (continued)

 
 
Three Months Ended June 30, 2018
 
 
 
 
 
Segment Data
 
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization, and Pension (EBITDAP):
 
Total
 
Integrated Systems
 
Aerospace Structures
 
Product Support
 
Corporate/Eliminations
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Loss
 
$
(76,534
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Add-back:
 
 
 
 
 
 
 
 
 
 
 
Non-service defined benefit income
 
(16,538
)
 
 
 
 
 
 
 
 
 
Income tax benefit
 
1,031

 
 
 
 
 
 
 
 
 
Interest expense and other
 
25,493

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating (Loss) Income
 
$
(66,548
)
 
$
35,409

 
$
(79,587
)
 
$
7,669

 
$
(30,039
)
 
Loss on assets held for sale
 
4,719

 

 

 

 
4,719

 
Adoption of ASU 2017-07
 
87,241

 

 
87,241

 

 

 
Amortization of acquired contract liabilities
 
(17,234
)
 
(8,849
)
 
(8,385
)
 

 

 
Depreciation and amortization
 
38,812

 
7,555

 
28,920

 
1,670

 
667

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization, and Pension ("Adjusted EBITDAP")
 
$
46,990

 
$
34,115

 
$
28,189

 
$
9,339

 
$
(24,653
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Sales
 
$
832,900

 
$
241,039

 
$
532,387

 
$
66,215

 
$
(6,741
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDAP Margin
 
5.8
%
 
14.7
%
 
5.4
%
 
14.1
%
 
n/a
 




















10



(Continued)
 FINANCIAL DATA (UNAUDITED)
 
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
 
Non-GAAP Financial Measure Disclosures (continued)
 
 
Three Months Ended June 30, 2017
 
 
 
 
 
Segment Data
 
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA):
 
Total
 
Integrated Systems
 
Aerospace Structures
 
Product Support
 
Corporate / Eliminations
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
$
(1,931
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Add-back:
 
 
 
 
 
 
 
 
 
 
 
Non-service defined benefit income
 
(19,377
)
 
 
 
 
 
 
 
 
 
Income tax expense
 
(678
)
 
 
 
 
 
 
 
 
 
Interest expense and other
 
21,018

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating (Loss) Income
 
$
(968
)
 
46,982

 
$
(22,488
)
 
$
8,437

 
(33,899
)
 
Amortization of acquired contract liabilities
 
(29,473
)
 
(7,303
)
 
(22,170
)
 

 

 
Depreciation and amortization
 
39,131

 
9,951

 
27,140

 
1,738

 
302

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")
 
$
8,690

 
$
49,630

 
$
(17,518
)
 
$
10,175

 
$
(33,597
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Sales
 
$
781,689

 
$
238,136

 
$
483,314

 
$
66,433

 
$
(6,194
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin
 
1.2%
 
21.5%
 
(3.8)%
 
15.3%
 
n/a
 










11



(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
 
 
 
 
June 30, 2018
 
 
 
 
Pre-Tax
 
After-Tax
 
Diluted EPS
 
FY19 EPS Guidance Range
Loss from Continuing Operations - GAAP
 
$
(75,503
)
 
$
(76,534
)
 
$
(1.54
)
 
$(0.55) - $0.15
Adjustments:
 
 
 
 
 
 
 
 
Adoption of ASU 2017-07
 
87,241

 
85,474

 
1.72

 
$1.72
Loss on assets held for sale
 
4,719

 
4,719

 
0.09

 
$0.09
Restructuring costs (cash)
 
4,047

 
3,359

 
0.07

 
$0.14 - $0.24
Adjusted Income from Continuing Operations - non-GAAP
 
$
20,504

 
$
17,018

 
$
0.34

 
$1.50 - $2.10

 
 
Three Months Ended
 
 
 
June 30, 2017
 
 
 
Pre-Tax
 
After-Tax
 
Diluted EPS
 
Loss from Continuing Operations - GAAP
 
$
(2,609
)
 
$
(1,931
)
 
$
(0.04
)
 
Adjustments:
 
 
 
 
 
 
 
Restructuring costs (non-cash)
 
860

 
636

 
0.01

 
Restructuring costs (cash)
 
17,500

 
12,950

 
0.26

 
Adjusted Income from Continuing Operations - non-GAAP
 
$
15,751

 
$
11,655

 
$
0.24

*
* Difference due to rounding
 
 
 
 
 
 
 

The following table reconciles our Operating income to Adjusted Operating income as noted above.
 
 
Three Months Ended
 
 
June 30, 2018
 
June 30, 2017
Operating Loss - GAAP
 
$
(66,548
)
 
(968
)
 
 
 
 
 
Adjustments:
 
 
 
 
Adoption of ASU 2017-07
 
87,241

 

Loss on assets held for sale
 
4,719

 

Restructuring costs (non-cash)
 

 
860

Restructuring costs (cash)
 
4,047

 
17,500

Adjusted Operating Income - non-GAAP
 
$
29,459

 
$
17,392



12



(Continued)
 FINANCIAL DATA (UNAUDITED)
 
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except per share data)
 
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
 
 
 
 
June 30,
 
 
 
 
2018
 
2017
 
 
FY19 Cash Flow Guidance Range
Cash flow from operations
 
$
(65,714
)
 
$
(99,048
)
 
 
$(150,000) - $(190,000)
Less:
 
 
 
 
 
 
 
Capital expenditures
 
(12,200
)
 
(12,085
)
 
 
(50,000) - (60,000)
Free cash flow
 
$
(77,914
)
 
$
(111,133
)
 
 
$(200,000) - $(250,000)



We use "Net Debt to Capital" as a measure of financial leverage.  The following table sets forth the computation of Net Debt to Capital:
 
 
June 30,
 
March 31,
 
 
2018
 
2018
Calculation of Net Debt
 
 
 
 
Current portion
 
$
16,710

 
$
16,527

Long-term debt
 
1,503,664

 
1,421,757

Total debt
 
1,520,374

 
1,438,284

Plus: Deferred debt issuance costs
 
16,007

 
16,949

Less: Cash
 
(33,055
)
 
(35,819
)
Net debt
 
$
1,503,326

 
$
1,419,414

 
 
 
 
 
Calculation of Capital
 
 
 
 
Net debt
 
$
1,503,326

 
$
1,419,414

Stockholders' (deficit) equity
 
(226,581
)
 
450,534

Total capital
 
$
1,276,745

 
$
1,869,948

 
 
 
 
 
Percent of net debt to capital
 
117.7
%
 
75.9
%


13
exhibit992tgqi1fy19
August 8, 2018 First Quarter FY’19 Earnings Conference Call Daniel J. Crowley, President and Chief Executive Officer James F. McCabe Jr., Senior Vice President and Chief Financial Officer


 
Forward Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward- looking statements are often, but not always, identified by the use of words such as “anticipate”, “believe”, “expect”, “plan”, “intend”, “project”, “may”, “will”, “should”, “could”, or similar words suggesting future outcomes or outlooks. These forward-looking statements include, but are not limited to, statements of expectations of or assumptions about strategic actions, objectives, expectations, intentions, aerospace market conditions, aircraft production rates, financial and operational performance, revenue and earnings growth and profitability and earnings results. These statements are based on the current projections, expectations and beliefs of Triumph’s management. These forward looking statements involve known and unknown risks, uncertainties and other factors which could cause actual results to differ materially from any expected future results, performance or achievements, including, but not limited to, competitive and cyclical factors relating to the aerospace industry, dependence on some of Triumph’s business from key customers, requirements of capital, uncertainties relating to the integration of acquired businesses, general economic conditions affecting Triumph’s business segments, product liabilities in excess of insurance, technological developments, limited availability of raw materials or skilled personnel, changes in governmental regulation and oversight and international hostilities and terrorism. Further information regarding the important factors that could cause actual results, performance or achievements to differ from those expressed in any forward looking statements can be found in Triumph’s reports filed with the SEC, including in the risk factors described in Triumph’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018. Triumph Group — First Quarter FY'19 2


 
Overview • Top-line up YOY 7% in Q1 ◦ Organic growth across all 3 segments • Free Cash Use improved YOY by $33M • Maintaining full year Revenue and Adjusted EPS guidance • Program stability enables full year cash visibility Triumph Financials Improving Year-over-Year Triumph Group — First Quarter FY'19 3


 
Sales Growth Drivers Q1 Full Year FY'18 $782M $3.2B Divestitures (27M) (67M) Rotorcraft deliveries recovering TIS Narrowbody ramping 6% 7-9% Strong Structural component repairs TPS KC-10, C-17 13% 4-5% Generating production revenue on TAS development programs 12% 7-8% FY'19 $833M $3.3B - $3.4B Triumph Group — First Quarter FY'19 4


 
Driving Organic Growth Competitive Wins Customer BU Large Military Transport Support Boeing TPS Cannon Breech Upgrade Kit US Army M284 TIS Remote Valve System US Navy CVN-73 TIS Follow-on Business Customer BU Blocker Door Assemblies Lockheed F-35 TAS Multi-year Extensions Lockheed C-130J TAS Tail Hook Stroke Dampener Lockheed F-35 TIS Take aways Customer BU Beams & R Fittings Lockheed UH-60 TAS Discrete Gears & Gear Shafts Lockheed UH-60 TIS Bearing Liners / Cartridge Spares Lockheed CH-53E TIS Military Wins Are Reshaping Portfolio, Backlog up 5% Year-Over-Year Triumph Group — First Quarter FY'19 5


 
Focus on the Core GE Additive Thermoplastics System Components Composite Material Military Components Engine MRO Triumph Group — First Quarter FY'19 6


 
Driving Cash from Operations • Global 7500 Cash Use Expected To Decline Quarter Over Quarter • G650 Transition on Track, Cash Positive in FY'19 • E2 Transition on Track, Break Even in FY'20 • Evaluating LT Supply Chain Arrangements on G280 and Global 7500 Addressing Largest Users of Cash Triumph Group — First Quarter FY'19 7


 
Portfolio Updates Business Divestitures Program Actions  Long Island (Build-to-print Machining)  Embraer E2  East Texas (Build-to-print Machining)  Gulfstream G650 (Pending) Long & Large (Build-to-print Machining)  Boeing 767 (Pending) APU Repair Product Line (Pending) Bombardier Global 7500 (Pending) Gulfstream G280 (w/ Israeli Facilities Aerospace Industries) From 74 to 56 facilities since FY16 (Pending) Bell 525 Two (2) more consolidations remain Occupancy reduced by 1M sq.ft. Focusing on Core and Derisking TAS Backlog Triumph Group — First Quarter FY'19 8


 
Consolidated Quarterly Results ($ in millions) FY’19 Q1 FY’18 Q1 Variance % • Organic sales increased 3%, excluding divestitures and impact of ASC 606 Net Sales $833 $782 7% ◦ Increased across all three Operating Loss (67) (1) NM segments Operating Margin (8)% —% • Adjusted operating income excludes: Adjusted Operating 29 17 71% ◦ $87M non-cash ASU 2017-07 Income pension charge ◦ $5M loss on assets held for sale Adjusted Operating Margin 4% 2% ◦ $4M restructuring costs Second consecutive quarter with organic growth Triumph Group — First Quarter FY'19 9


 
Integrated Systems Year Over Year Comparison © SAAB Triumph Integrated Systems was awarded contract with SAAB to provide Gripen Airfram Mounted Accessory Drive (AMAD) Financial Highlights • Net sales increase included: • Awarded contract with SAAB for Gripen Airframe Mounted Accessory Drive (AMAD) ◦ Organic growth ~6% driven by OE volumes in • YTD Book to Bill of 1.01:1 A320, 737 and 787, partially offset by ◦ Divestitures ($10M) • Operating margin decline due to prior year assertion settlement ($6M) and current year business consolidation and improvement cost Triumph Group — First Quarter FY'19 10


 
Product Support Year Over Year Comparison Triumph Product Support to provide CFM56-7 Nacelle MRO services Highlights Financial • Awarded additional V2500 Thrust Reverser MRO • Net sales change included: business in the APAC region ◦ Organic growth ~13% due primarily to increased • Awarded 5-year contract to provide CFM56-7 Nacelle demand of accessory and structural components, MRO services partially offset by • Selected by U.S. based cargo carrier to provide 5- ◦ Divestitures ($8M) year MRO support for inlet and fan cowls across • Reduced selling, general and administrative expenses multiple fleet types 6% year over year Triumph Group — First Quarter FY'19 11


 
Aerospace Structures Year Over Year Comparison HALE UAV: Northrop Grumman's "Global Hawk" Financial Highlights • Net sales increase included • Favorable assertion settlement with Boeing ◦ Organic growth ~12% as Global 7500 production • Positive trends on HALE program across all metrics accelerates, partially offset by • V-22 program quality at record high/near zero defects ◦ Divestitures ($9M) • Net unfavorable cumulative catch-up adjustments on long • 100% on-time delivery to Boeing and Airbus for term contracts of $6M, primarily on G280 insulation products and 777X interior ducts • Pension accounting change impacting Q1 margin by ($87M) • YTD Book to Bill 0.84:1 • Operating margin, adjusted for the pension & restructuring charges, was 2% Triumph Group — First Quarter FY'19 12


 
Free Cash Flow Walk - FY'19 Q1 Consolidated ($ in millions) FY’19 Q1 Q1 FY 19 Cash Drivers Net Income $ (77) • Restructuring used $4M Non-cash items: Depreciation & Amortization 39 • Net working capital growth of $104M Interest Expense & Other 25 includes: Amortization of Acquired Contracts (17) • Reduction of $53M of prior customer Loss on divestiture 5 advances Adoption of ASU 2017-07 87 • Continued cash use on Global 7500 of Pension Income (13) $81M OPEB Income (3) Income Tax Expense 1 Cash uses: Working Capital Change (104) Interest Payments (13) * See Appendix for reconciliation of cash used in operations to free cash use Capital Expenditures (12) OPEB Payments (4) Improving Free Cash Flow Tax Refunds, net 8 Free Cash Use $ (78) * 13


 
Net Debt & Liquidity ($ in millions) FY’19 Q1 • Availability ~ $543M Cash $ (33) • In July, amended terms of credit facility to $800M Revolving Credit Facility 226 increase compliance margin and flexibility $125M Receivable Securitization Facility 78 • Senior Secured Leverage Ratio ~ 1.6x vs. 3.5x Capital Leases 57 • Interest Coverage Ratio ~ 2.86x vs. 2.25x 2013 Senior Notes Due 2021 375 2014 Senior Notes Due 2022 300 2017 Senior Notes Due 2025 500 Sufficient Financial Capacity & Liquidity Net Debt $ 1,503 Triumph Group — First Quarter FY'19 14


 
FY'19 Guidance Net Sales $3.3B - $3.4B Adjusted EPS * $1.50 - $2.10 Effective Tax Rate ^ ~ 17% Capital Expenditures $50M - $60M Free Cash Use * $(200M)- $(250M) *see adjustments in the appendix ^ Potential opportunity to lower through release of valuation allowance and use of deferred tax benefits from prior divestitures. Triumph Group — First Quarter FY'19 15


 
FY'19 Cash Flow Guidance $ in millions Q1 Actual Guidance Programs using cash: Status Cash used in operations $ (66) $ (150)$ (190) Global 7500 In Negotiations Capital expenditures (12) (50) (60) Boeing 747-8 Sunsetting Free cash use (78) (200) (250) E2 In Transition G280 In Negotiations Includes: Repayment of advances 53 180 180 Announced, but pending divestitures Global 7500 program 81 130 130 ~$130 in sales; with additional $300 in sales from potential divestitures in Proforma free cash flow $ 56 $ 110 $ 60 pipeline expected near the end of fiscal 2019 Triumph Group — First Quarter FY'19 16


 
Concluding Remarks • FY'19 to be follow-through year with top-line growth • Restructuring in FY'16 - 19 sets foundation for EPS growth in FY'20 - 22 • Cash use declining in FY'19 and on track to positive Free Cash Flow in FY'20 Positioning TGI For Next 25 Years Triumph Group — First Quarter FY'19 17


 
Our Vision Our Mission Our Values We aspire to be the premier design, As One Team, we partner with our Integrity manufacturing and support company customers to triumph over the Continuous Improvement whose comprehensive capabilities, hardest aerospace, defense and integrated processes and innovative industrial challenges, enabling us to Teamwork employees advance the safety and deliver value to our shareholders. Innovation prosperity of the world. Act with Velocity Triumph Group — First Quarter FY'19 18


 
Appendix Triumph Group — First Quarter FY'19 19


 
Top Programs Integrated Systems Aerospace Structures Boeing 737 Gulfstream Airbus A320, A321 Boeing 767, Tanker Boeing 787 Bombardier Global Boeing AH-64 Boeing 747 Boeing V-22 Boeing 787 Boeing CH-47 Airbus A330, A340 Lockheed Martin C-130 Boeing 737 Lockheed Martin F-35 Boeing 777 Bell Helicopter 429 Airbus A350 Sikorsky UH60 Boeing V-22 Represents 58% of Represents 80% of Integrated Systems backlog Aerospace Structures backlog 20


 
Supplemental Data Pension/OPEB Analysis ($ in millions) FY’18 FY’19 Pension Expense (Income) ^ ≈ ($61) ≈ ($51) Cash Pension Contribution ≈ $5 ≈ $2 OPEB Expense (Income) ^ ≈ ($11) ≈ ($10) Cash OPEB Contribution ≈ $12 ≈ $12 • The Company recognized the cumulative effect from the adoption of ASU 2017-07 of $87M as a current period charge to earnings in our first quarter of fiscal year ended March 31, 2019. ^ Excludes impact from one-time adjustments such as curtailments, settlements or special termination benefits 21


 
ASC 606 Adoption • The adoption of this standard impacts the amount and timing of revenue recognition and the accounting treatment of capitalized pre-production costs for certain of our contracts. • The units-of-delivery method is no longer viable and many performance obligations are satisfied over time which changes the timing of revenue and associated production costs for certain contracts. • For performance obligations satisfied over time, will most likely use an input method as basis for recognizing revenue Ex. resources consumed, labor hours expended, costs incurred, time lapsed, or machine hours used • We will continue to record forward losses relating to unfulfilled contracts and options consistent with historical accounting policies • Accounting for tooling, and certain other costs to fulfill contracts continue under existing guidance 22


 
FINANCIAL DATA (UNAUDITED) Non-GAAP TRIUMPH GROUP, INC. AND SUBSIDIARIES (dollars in thousands) Disclosure Non-GAAP Financial Measures Disclosures 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 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 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 June 30, 2018 Pre-Tax After-Tax Diluted EPS Loss from Continuing Operations - GAAP $ (75,503) $ (76,534) $ (1.54) Adjustments: Adoption of ASU 2017-07 87,241 85,474 1.72 Loss on assets held for sale 4,719 4,719 0.09 Restructuring costs (cash) 4,047 3,359 0.07 Adjusted Income from Continuing Operations - Non-GAAP $ 20,504 $ 17,018 $ 0.34 Three Months Ended June 30, 2017 Pre-Tax After-Tax Diluted EPS Income from Continuing Operations - GAAP $ (2,609) $ (1,931) $ (0.04) Adjustments: Restructuring costs (non-cash) 860 636 0.01 Restructuring costs (cash) 17,500 12,950 0.26 Adjusted Income from Continuing Operations - Non-GAAP $ 15,751 $ 11,655 $ 0.24 * * Difference due to rounding 23


 
(Continued) Non-GAAP FINANCIAL DATA (UNAUDITED) TRIUMPH GROUP, INC. AND SUBSIDIARIES Disclosure (dollars in thousands) Non-GAAP Financial Measures Disclosures (continued) Cash provided by operations has been provided for consistency and comparability. We also use free cash flow available for debt reduction as a key factor in planning for and consideration of strategic acquisitions, stock repurchases 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 available for debt reduction. Three Months Ended June 30, Guidance 2018 2017 Cash (used in) provided by operations $ (150,000-190,000) $ (65,714) $ (99,048) Less: Capital expenditures (50,000 - 60,000) (12,200) (12,085) Free cash flow (use) $ (200,000 - 250,000) $ (77,914) $ (111,133) The Company provides earnings per share guidance on an adjusted non-GAAP basis excluding the effects of transformation related costs, gains (losses) on divestitures, other non-recurring items, such as adoption of ASU 2017-07. The following table reconciles earnings per share on a GAAP basis guidance to adjusted earnings per diluted share. Guidance - earnings per share - GAAP $(0.55) - $0.15 Per share effect of: Adoption of ASU 2017-07 $1.72 Loss on assets held for sale $0.09 Transformation related costs $0.14 - $0.24 Guidance - adjusted earnings per diluted share $ 1.50 - $2.10 24


 
(Continued) Non-GAAP FINANCIAL DATA (UNAUDITED) TRIUMPH GROUP, INC. AND SUBSIDIARIES Disclosure (dollars in thousands) Non-GAAP Financial Measures Disclosures (continued) We use "Net Debt to Capital" as a measure of financial leverage. The following table sets forth the computation of Net Debt to Capital: June 30, March 31, 2018 2018 Calculation of Net Debt Current portion $ 16,710 $ 16,527 Long-term debt 1,503,664 1,421,757 Total debt 1,520,374 1,438,284 Plus: Deferred debt issuance costs 16,007 16,949 Less: Cash (33,055) (35,819) Net debt $ 1,503,326 $ 1,419,414 Calculation of Capital Net debt $ 1,503,326 $ 1,419,414 Stockholders' (deficit) equity (226,581) 450,534 Total capital $ 1,276,745 $ 1,869,948 Percent of net debt to capital 117.7% 75.9% 25