News Releases

Triumph Group Reports Third Quarter Fiscal 2017 Results

February 2, 2017 at 6:00 AM EST

Reaffirms Fiscal Year 2017 Revenue and EPS Guidance and Updates Cash Guidance

BERWYN, Pa.--(BUSINESS WIRE)--Feb. 2, 2017-- Triumph Group, Inc. (NYSE:TGI) (“Triumph” or the “Company”) today reported financial results for its third quarter of fiscal year 2017, which ended December 31, 2016.

Third Quarter Fiscal 2017 Results

  • Net sales were $844.9 million.
  • Operating income was $55.2 million; excluding transformation related costs of $28.5 million, operating income was $83.6 million, reflecting an adjusted operating margin of 10%.
  • Net income was $29.3 million, or $0.59 per diluted share; excluding the aforementioned costs, net income was $50.1 million, or $1.01 per diluted share.
  • Cash used in operations was $41.4 million, a 12% improvement from the second quarter of fiscal 2017.
  • Free cash flow use was $37.4 million, a 24% improvement from the second quarter of fiscal 2017.
  • Reaffirms revenue guidance of $3.5 to $3.6 billion and earnings per diluted share guidance of $3.15 to $3.45.
  • Adjusts fiscal 2017 cash use guidance to $190.0 million to $210.0 million due to higher working capital requirements related to major development program.

“Our third quarter performance reflected a continued focus on working capital initiatives, as well as improved margins in our Integrated Systems and Product Support segments, which partially offset the impact of anticipated volume declines on legacy programs,” stated Daniel J. Crowley, Triumph’s president and chief executive officer. “Our new business pipeline and win rate continue to improve, and we are pleased to have added several new customers in the third quarter. We’ve completed many of the critical steps of our strategy over the past three quarters and remain focused on transforming all aspects of our business in order to deliver value to our shareholders.”

“We are executing our One Triumph transformation strategy and are on track to exceed our full year cost savings goal of $44 million. Additionally, we announced definitive agreements to divest two businesses as part of our ongoing efforts to streamline our portfolio and strengthen our balance sheet. As our Precision Components segment works through its restructuring, we were pleased that the segment’s Interiors business received the 2016 Partner of the Year Award from Mitsubishi Heavy Industries.”

Third Quarter Fiscal 2017 Overview

Net sales for the fiscal third quarter of 2017 declined 8% from the prior year quarter net sales, including $1.2 million of incremental sales from the October 2015 acquisition of Fairchild Controls offset by $4.5 million of revenues related to the second quarter divestiture. On an organic basis, sales were down 7% primarily due to production rate reductions by customers on the 747-8, G450/550 and C-17 programs, changes in model mix, decreased demand in commercial rotorcraft and foreign exchange rates. These factors were partially offset by increased production rates on the 767/Tanker program and stronger sales in the Product Support segment resulting from key contract wins with regional and commercial operators for components and accessories.

Operating income included $14.1 million of restructuring costs and $14.4 million loss on the pending sale of assets of Triumph Air Repair, the APU overhaul operations of Triumph Aviation Services-Asia, Ltd. and Triumph Engines-Tempe. Cumulative catch-up adjustments on long-term contracts were a net favorable $2.1 million.

Net income for the third quarter of fiscal year 2017 was $29.3 million, or $0.59 per diluted share. Triumph’s results included the following:

($ million except EPS)    

Pre-tax

   

After-tax

   

Diluted EPS

Income from Continuing Operations- GAAP   $ 35.5   $ 29.3   $ 0.59
Transformation related costs:                  
Loss on assets held for sale     14.4     10.5     0.21
Restructuring costs (non-cash)     3.1     2.2     0.05
Restructuring costs (cash)     11.1     8.1     0.16
                   
Adjusted Income from Continuing Operations- non-GAAP   $ 64.1   $ 50.1   $ 1.01
                   

The number of shares used in computing diluted earnings per share for the third quarter of fiscal year 2017 was 49.4 million.

For the quarter ended December 31, 2016, cash used in operations was $41.4 million, which reflected continued investment in key development programs and restructuring efforts. This was a $5.8 million improvement from the prior quarter.

Outlook

Based on current aircraft production rates, the Company reaffirmed its fiscal year 2017 revenue outlook of $3.5 to $3.6 billion and full year earnings per diluted share guidance of $3.15 to $3.45. This guidance assumes an effective tax rate of 18% and does not include any gain/loss on divestitures.

The Company is adjusting its free cash use guidance to $190.0 million to $210.0 million from $100.0 million to $120.0 million due to higher working capital requirements related to a major development program. The Company’s current outlook includes restructuring costs and benefits but does not take into account any divestitures.

Conference Call

Triumph Group will hold a conference call today, February 2nd at 8:30 a.m. (ET) to discuss the third quarter fiscal year 2017 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 February 2nd to February 9th by calling (888) 859-2056 (Domestic) or (404) 537-3406 (International), passcode # 51789715.

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 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, 2016.

FINANCIAL DATA (UNAUDITED) ON FOLLOWING 10 PAGES

 
FINANCIAL DATA (UNAUDITED)
                         
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(in thousands, except per share data)
                         
            Three Months Ended   Nine Months Ended
            December 31,   December 31,
                         
CONDENSED STATEMENTS OF INCOME     2016   2015   2016   2015
                         
                         
Net sales       $ 844,863   $ 913,866     $ 2,612,885   $ 2,828,278
                         
Operating income (loss)         55,166     (126,250 )     172,379     91,663
                         
Interest expense and other         19,698     15,792       55,721     49,539
Income tax expense (benefit)         6,136     (53,393 )     32,786     6,429
                         
Net income (loss)       $ 29,332   $ (88,649 )   $ 83,872   $ 35,695
                         
Earnings per share - basic:                    
                         
Net income (loss)       $ 0.59   $ (1.80 )   $ 1.70   $ 0.73
                         
Weighted average common shares outstanding - basic     49,329     49,228       49,294     49,213
                         
Earnings per share - diluted:                    
                         
Net income (loss)       $ 0.59   $ (1.80 )   $ 1.70   $ 0.72
                         
Weighted average common shares outstanding - diluted     49,440     49,228       49,421     49,312
                         
Dividends declared and paid per common share     $ 0.04   $ 0.04     $ 0.12   $ 0.12
                   

 

                   
FINANCIAL DATA (UNAUDITED)
                         
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except per share data)
                         
BALANCE SHEET               Unaudited   Audited
                    December 31,   March 31,
                    2016   2016
      Assets        
  Cash and cash equivalents               $ 35,461     $ 20,984  
  Accounts receivable, net                 307,853       444,208  
  Inventory, net of unliquidated progress payments of $109,334 and $123,155     1,474,054       1,236,190  
  Prepaid and other current assets                 23,564       41,259  
  Assets held for sale                 77,235       -  
    Current assets                 1,918,167       1,742,641  
                         
  Property and equipment, net                 820,177       889,734  
  Goodwill                 1,407,532       1,444,254  
  Intangible assets, net                 605,248       649,612  
  Other, net                 107,796       108,852  
                         
  Total assets               $ 4,858,920     $ 4,835,093  
                         
      Liabilities & Stockholders' Equity        
                         
  Current portion of long-term debt               $ 187,731     $ 42,441  
  Accounts payable                 403,921       410,225  
  Accrued expenses                 561,817       683,208  
  Liabilities related to assets held for sale               14,125       -  
    Current liabilities                 1,167,594       1,135,874  
                         
  Long-term debt, less current portion               1,470,649       1,374,879  
  Accrued pension and post-retirement benefits, noncurrent           599,089       664,664  
  Deferred income taxes, noncurrent                 82,322       62,453  
  Other noncurrent liabilities                 558,450       662,279  
                         
  Stockholders' Equity:                    
    Common stock, $.001 par value, 100,000,000 shares              
    authorized, 52,460,920 and 52,460,920 shares issued         51       51  
    Capital in excess of par value                 843,607       851,102  
    Treasury stock, at cost, 2,903,169 and 3,131,921 shares         (184,668 )     (199,415 )
    Accumulated other comprehensive loss               (386,471 )     (347,162 )
    Retained earnings                 708,297       630,368  
    Total stockholders' equity                 980,816       934,944  
                         
  Total liabilities and stockholders' equity             $ 4,858,920     $ 4,835,093  
                     

 

                   
FINANCIAL DATA (UNAUDITED)
                         
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
                         
SEGMENT DATA       Three Months Ended   Nine Months Ended
            December 31,   December 31,
                         
            2016   2015   2016   2015
                         
Net sales:                    
  Integrated Systems       $ 256,080     $ 271,849     $ 758,803     $ 791,901  
  Aerospace Structures         304,235       346,639       956,114       1,127,230  
  Precision Components         226,294       250,284       740,354       781,250  
  Product Support         87,292       78,127       257,317       226,649  
  Elimination of inter-segment sales         (29,038 )     (33,033 )     (99,703 )     (98,752 )
            $ 844,863     $ 913,866     $ 2,612,885     $ 2,828,278  
                         
Operating income (loss):                    
  Integrated Systems       $ 51,596     $ 52,321     $ 145,379     $ 153,978  
  Aerospace Structures         23,867       (210,938 )     57,898       (132,458 )
  Precision Components         2,942       24,106       7,223       74,468  
  Product Support         14,662       12,402       42,986       31,514  
  Corporate         (37,901 )     (4,141 )     (81,107 )     (35,839 )
            $ 55,166     $ (126,250 )   $ 172,379     $ 91,663  
                         
Operating Margin %                    
  Integrated Systems         20.1 %     19.2 %     19.2 %     19.4 %
  Aerospace Structures         7.8 %     -60.9 %     6.1 %     -11.8 %
  Precision Components         1.3 %     9.6 %     1.0 %     9.5 %
  Product Support         16.8 %     15.9 %     16.7 %     13.9 %
  Consolidated         6.5 %     -13.8 %     6.6 %     3.2 %
                         
Depreciation and amortization:                    
  Integrated Systems       $ 9,766     $ 10,659     $ 30,228     $ 31,316  
  Aerospace Structures         17,942       245,266       54,289       276,845  
  Precision Components         13,999       11,407       42,344       39,600  
  Product Support         2,294       2,462       7,230       7,352  
  Corporate         330       434       989       1,224  
            $ 44,331     $ 270,228     $ 135,080     $ 356,337  
                         
Amortization of acquired contract liabilities:                  
  Integrated Systems       $ (7,628 )   $ (9,804 )   $ (27,101 )   $ (30,316 )
  Aerospace Structures         (21,105 )     (23,831 )     (60,190 )     (67,039 )
  Precision Components         (473 )     (790 )     (1,740 )     (2,573 )
            $ (29,206 )   $ (34,425 )   $ (89,031 )   $ (99,928 )
                         
Capital expenditures:                    
  Integrated Systems       $ 2,763     $ 10,444     $ 8,586     $ 20,309  
  Aerospace Structures         2,228       8,028       9,820       23,494  
  Precision Components         2,636       5,853       11,040       16,979  
  Product Support         687       714       2,020       2,047  
  Corporate         843       196       1,657       534  
            $ 9,157     $ 25,235     $ 33,123     $ 63,363  
                                         
 

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, 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. We disclose Adjusted EBITDA on a consolidated and 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 as an 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, 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 is not a measurement 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 as a substitute 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 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 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 15 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 excludes 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 helps investors meaningfully evaluate and compare our performance from quarter to quarter and from year to year. We also believe Adjusted EBITDA 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 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 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.
  • Curtailments, settlements and early retirement incentives may be useful to investors to consider because it represents the current period impact of the change in defined benefit obligation due to the reduction in future service costs. We do not believe these charges (gains) 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.
 

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 reconciled to our net income for the indicated periods (in thousands):

            Three Months Ended   Nine Months Ended
            December 31,   December 31,
            2016   2015   2016   2015

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

     
  Net Income (loss)       $ 29,332     $ (88,649 )   $ 83,872     $ 35,695  
                         
  Add-back:                    
  Income Tax Expense         6,136       (53,393 )     32,786       6,429  
  Interest Expense and Other         19,698       15,792       55,721       49,539  
  Curtailment charge         -       -       -       2,863  
  Loss on divestiture and assets held for sale     14,350       -       19,124       -  
  Legal settlement charges         -       12,400       -       12,400  
  Amortization of Acquired Contract Liabilities     (29,206 )     (34,425 )     (89,031 )     (99,928 )
  Depreciation and Amortization         44,331       270,228       135,080       356,337  
                         
  Adjusted Earnings before Interest, Taxes,                  
  Depreciation and Amortization ("Adjusted EBITDA")   $ 84,641     $ 121,953     $ 237,552     $ 363,335  
                         
  Net Sales       $ 844,863     $ 913,866     $ 2,612,885     $ 2,828,278  
                         
  Adjusted EBITDA Margin         10.4 %     13.9 %     9.4 %     13.3 %
                       
 
FINANCIAL DATA (UNAUDITED)
                             
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
                             
Non-GAAP Financial Measure Disclosures (continued)
                             

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

     

Three Months Ended December 31, 2016

            Segment Data
       

Total

 

Integrated
Systems

 

Aerospace
Structures

 

Precision
Components

 

Product
Support

 

Corporate /
Eliminations

                             
Net Income   $ 29,332                      
                             
Add-back:                        
Income Tax Expense     6,136                      
Interest Expense and Other     19,698                      
                             
Operating Income (Loss)   $ 55,166     $ 51,596     $ 23,867     $ 2,942     $ 14,662     $ (37,901 )
                             
Loss on assets held for sale     14,350       -       -       -       -       14,350  
Amortization of Acquired Contract Liabilities     (29,206 )     (7,628 )     (21,105 )     (473 )     -       -  
Depreciation and Amortization     44,331       9,766       17,942       13,999       2,294       330  
                             
Adjusted Earnings (Losses) before Interest, Taxes,                    
Depreciation and Amortization ("Adjusted EBITDA")   $ 84,641     $ 53,734     $ 20,704     $ 16,468     $ 16,956     $ (23,221 )
                             
Net Sales   $ 844,863     $ 256,080     $ 304,235     $ 226,294     $ 87,292     $ (29,038 )
                             
Adjusted EBITDA Margin     10.4 %     21.6 %     7.3 %     7.3 %     19.4 %     n/a  
                             
                             

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

  Nine Months Ended December 31, 2016
            Segment Data
       

Total

 

Integrated
Systems

 

Aerospace
Structures

 

Precision
Components

 

Product
Support

 

Corporate /
Eliminations

                             
Net Income   $ 83,872                      
                             
Add-back:                        
Income Tax Expense     32,786                      
Interest Expense and Other     55,721                      
                             
Operating Income (Loss)   $ 172,379     $ 145,379     $ 57,898     $ 7,223     $ 42,986     $ (81,107 )
                             
Loss on divestiture and assets held for sale     19,124       -       -       -       -       19,124  
Amortization of Acquired Contract Liabilities     (89,031 )     (27,101 )     (60,190 )     (1,740 )     -       -  
Depreciation and Amortization     135,080       30,228       54,289       42,344       7,230       989  
                             
Adjusted Earnings (Losses) before Interest, Taxes,                    
Depreciation and Amortization ("Adjusted EBITDA")   $ 237,552     $ 148,506     $ 51,997     $ 47,827     $ 50,216     $ (60,994 )
                             
Net Sales   $ 2,612,885     $ 758,803     $ 956,114     $ 740,354     $ 257,317     $ (99,703 )
                             
Adjusted EBITDA Margin     9.4 %     20.3 %     5.8 %     6.5 %     19.5 %     n/a  
                                                 
                         
FINANCIAL DATA (UNAUDITED)
                             
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
                             
Non-GAAP Financial Measure Disclosures (continued)                

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

  Three Months Ended December 31, 2015
            Segment Data
       

Total

 

Integrated
Systems

 

Aerospace
Structures

 

Precision
Components

 

Product
Support

 

Corporate /
Eliminations

                             
Net Loss   $ (88,649 )                    
                             
Add-back:                        
Income Tax Expense     (53,393 )                    
Interest Expense and Other     15,792                      
                             
Operating (Loss) Income   $ (126,250 )   $ 52,321     $ (210,938 )   $ 24,106     $ 12,402     $ (4,141 )
                             
Legal settlement charges     12,400       -       10,500       -       1,900       -  
Amortization of Acquired Contract Liabilities     (34,425 )     (9,804 )     (23,831 )     (790 )     -       -  
Depreciation and Amortization     270,228       10,659       245,266       11,407       2,462       434  
                             
Adjusted Earnings (Losses) before Interest, Taxes,                
Depreciation and Amortization ("Adjusted EBITDA")   $ 121,953     $ 53,176     $ 20,997     $ 34,723     $ 16,764     $ (3,707 )
                             
Net Sales   $ 913,866     $ 271,849     $ 346,639     $ 250,284     $ 78,127     $ (33,033 )
                             
Adjusted EBITDA Margin     13.9 %     20.3 %     6.5 %     13.9 %     21.5 %     n/a  
                             
                             

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

  Nine Months Ended December 31, 2015
            Segment Data
       

Total

 

Integrated
Systems

 

Aerospace
Structures

 

Precision
Components

 

Product
Support

 

Corporate /
Eliminations

                             
Net Income   $ 35,695                      
                             
Add-back:                        
Income Tax Expense     6,429                      
Interest Expense and Other     49,539                      
                             
Operating Income (Loss)   $ 91,663     $ 153,978     $ (132,458 )   $ 74,468     $ 31,514     $ (35,839 )
                             
Curtailment charge     2,863       -       -       -       -       2,863  
Legal settlement charges     12,400       -       10,500       -       1,900       -  
Amortization of Acquired Contract Liabilities     (99,928 )     (30,316 )     (67,039 )     (2,573 )     -       -  
Depreciation and Amortization     356,337       31,316       276,845       39,600       7,352       1,224  
                             
Adjusted Earnings (Losses) before Interest, Taxes,                
Depreciation and Amortization ("Adjusted EBITDA")   $ 363,335     $ 154,978     $ 87,848     $ 111,495     $ 40,766     $ (31,752 )
                             
Net Sales   $ 2,828,278     $ 791,901     $ 1,127,230     $ 781,250     $ 226,649     $ (98,752 )
                             
Adjusted EBITDA Margin     13.3 %     20.3 %     8.3 %     14.3 %     18.0 %     n/a  
                         
 

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
          December 31, 2016
         

Pre-tax

 

After-tax

 

Diluted EPS

                   
Income from Continuing Operations- GAAP   $ 35,468   $ 29,332   $ 0.59
Transformation related costs:              
Loss on assets held for sale       14,350     10,476     0.21
Restructuring costs (non-cash)       3,065     2,237     0.05
Restructuring costs (cash)       11,067     8,079     0.16
                   
Adjusted Income from Continuing Operations- non-GAAP   $ 63,950   $ 50,124   $ 1.01
                   
                   
          Nine Months Ended
          December 31, 2016
         

Pre-tax

 

After-tax

 

Diluted EPS

                   
Income from Continuing Operations- GAAP   $ 116,658   $ 83,872   $ 1.70
Adjustments:              
Triumph Precision Components - Strike related costs     15,701     11,462     0.23
Triumph Precision Components - Inventory write-down     6,089     4,445     0.09
Triumph Aerospace Structures - UAS program     14,200     10,366     0.21
Loss on divestiture and assets held for sale     19,124     15,250     0.31
Restructuring costs (non-cash)       10,296     7,516     0.15
Restructuring costs (cash)       28,180     20,571     0.42
                   
Adjusted Income from Continuing Operations- non-GAAP   $ 210,248   $ 153,482   $ 3.11
                   
                 
FINANCIAL DATA (UNAUDITED)
                     
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
                     
Non-GAAP Financial Measure Disclosures (continued)          
          Three Months Ended
          December 31, 2015
         

Pre-tax

 

After-tax

 

Diluted EPS

                     
Loss from Continuing Operations- GAAP   $ (142,042 )   $ (88,649 )   $ (1.80 )  
Adjustments:                
Legal settlement charges       12,400       8,531       0.17    
Tradename impairment       229,200       148,751       3.02    
                     
Adjusted Income from Continuing Operations- non-GAAP   $ 99,558     $ 68,633     $ 1.39    
                     
                     
          Nine Months Ended
          December 31, 2015
         

Pre-tax

 

After-tax

 

Diluted EPS

                     
Income from Continuing Operations- GAAP   $ 42,124     $ 35,695     $ 0.72    
Adjustments:                
Legal settlement charges       12,400       8,531       0.17    
Tradename impairment       229,200       148,751       3.02    
Facility consolidation costs       5,360       3,688       0.07    
Curtailment charge       2,863       1,970       0.04    
                     
                     
Adjusted Income from Continuing Operations- non-GAAP   $ 291,947     $ 198,635     $ 4.03   *
  * Difference due to rounding.                
                     

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

            Three Months Ended   Three Months Ended
           

December 31, 2016

 

December 31, 2015

Operating Income (Loss) - GAAP       $ 55,166       $ (126,250 )
Adjustments:                
Loss on assets held for sale         14,350         -  
Tradename impairment         -         229,200  
Legal settlement charges         -         12,400  
Restructuring costs (non-cash)         3,065         -  
Restructuring costs (cash)         11,067         -  
Adjusted Operating Income-non-GAAP       $ 83,648       $ 115,350  
                 
 

FINANCIAL DATA (UNAUDITED)

 

TRIUMPH GROUP, INC. AND SUBSIDIARIES

(dollars in thousands)

Non-GAAP Financial Measure Disclosures (continued)

Cash provided by operations, is 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 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       Nine Months Ended
            December 31,       December 31,
            2016       2016
                     
  Cash flow from operations       $ (41,415 )       $ (172,651 )
  Less:                
  Capital expenditures         (9,157 )         (33,123 )
  Sale of assets         13,141           23,185  
  Free cash flow available for debt reduction, acquisitions            
    and share repurchases       $ (37,431 )       $ (182,589 )
                     
We use "Net Debt to Capital" as a measure of financial leverage. The following table sets forth the computation of Net Debt to Capital:
                     
            December 31,   March 31,    
            2016   2016    
                     
   

Calculation of Net Debt

               
    Current portion       $ 187,731     $ 42,441      
    Long-term debt         1,470,649       1,374,879      
    Total debt         1,658,380       1,417,320      
    Plus: Deferred debt issuance costs         12,493       8,971      
    Less: Cash         (35,461 )     (20,984 )    
    Net debt       $ 1,635,412     $ 1,405,307      
                     
   

Calculation of Capital

               
    Net debt       $ 1,635,412     $ 1,405,307      
    Stockholders' equity         980,816       934,944      
    Total capital       $ 2,616,228     $ 2,340,251      
                     
    Percent of net debt to capital         62.5 %     60.0 %    
                     

 

Source: Triumph Group, Inc.

Triumph Group, Inc.
Media:
Michele Long, 610-251-1000
mmlong@triumphgroup.com
or
Investor Relations:
Sheila G. Spagnolo
610-251-1000
sspagnolo@triumphgroup.com