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|Triumph Group Reports Strong Fourth Quarter and Full Fiscal Year 2010 Results|
WAYNE, Pa., Apr 28, 2010 (BUSINESS WIRE) --Triumph Group, Inc. (NYSE:TGI) today reported that, for the fiscal year ended March 31, 2010, net sales totaled $1.295 billion, a four percent increase from fiscal year 2009 net sales of $1.240 billion. Income from continuing operations for fiscal year 2010 was $85.3 million, or $5.12 per diluted share, versus $92.7 million, or $5.59 per diluted share, for fiscal year 2009. Net income for fiscal year 2010 was $67.8 million, or $4.07 per diluted share, versus $88.0 million, or $5.30 per diluted share, for the prior fiscal year. The number of shares used in computing diluted earnings per share for fiscal year 2010 was 16.7 million shares. During the fiscal year, the company generated $169.6 million of cash flow from operations. The results for the fiscal year included $6.1 million of incremental non-cash interest expense associated with the adoption of ASC 470-20 (formerly FSP APB 14-1), which required a change in accounting method for convertible debt interest, and approximately $5.3 million of interest expense associated with the senior subordinated notes issued during the third quarter of fiscal year 2010. Approximately $4.1 million of start up costs related to the Mexican facility were included in the results for the fiscal year. Prior year results were restated to reflect the adoption of ASC 470-20, resulting in an incremental $6.2 million of interest expense over the previously reported amount.
For the fourth quarter ended March 31, 2010, net sales were $352.0 million, a thirteen percent increase from last year's fourth quarter net sales of $311.2 million. Income from continuing operations for the fourth quarter of fiscal year 2010 increased eleven percent to $25.0 million, or $1.49 per diluted share, versus $22.6 million, or $1.36 per diluted share, for the fourth quarter of the prior fiscal year. Net income for the fourth quarter of fiscal year 2010 increased eighteen percent to $24.7 million, or $1.47 per diluted share, versus $20.9 million, or $1.26 per diluted share, for the fourth quarter of the prior fiscal year. The number of shares used in computing diluted earnings per share for the fourth quarter of fiscal year 2010 was 16.8 million shares. During the quarter, the company generated $43.2 million of cash flow from operations. The results for the quarter included $1.6 million of incremental non-cash interest expense associated with the adoption of ASC 470-20 and approximately $3.6 million of interest expense associated with the senior subordinated notes issued in November, 2009. Approximately $1.25 million of start up costs related to the Mexican facility were also included in the results for the quarter. Prior year fourth quarter results were restated to reflect the adoption of ASC 470-20, resulting in an incremental $1.5 million of interest expense over the previously reported amount.
Richard C. Ill, Triumph's Chairman and Chief Executive Officer, said, "We are proud of the results we achieved during the fourth quarter. In particular, we were able to deliver organic sales growth within our Aerospace Systems Group, increase operating income and improve our underlying margin on both a year over year and sequential basis. In addition, we saw our backlog grow during the fourth quarter. During the year, we managed our company conservatively, focusing on reducing costs, improving operations and maximizing cash flow. The impact of these efforts is reflected in our fourth quarter results as well as the strong cash flow generated throughout the year."
The Aerospace Systems segment reported net sales for fiscal year 2010 of $1.073 billion, compared to $988.4 million for the prior fiscal year, an increase of nine percent. For the fourth quarter of fiscal year 2010, net sales increased eighteen percent to $294.2 million from $249.8 million for the prior fiscal year period. Organic sales growth for the quarter was three percent. Operating income for fiscal year 2010 was $170.5 million, compared to $168.0 million for the prior fiscal year, an increase of two percent. For the fourth quarter, operating income increased twenty-three percent to $50.4 million versus $41.2 million for the prior fiscal year quarter. Operating margin for the quarter increased to seventeen percent, a four percent year over year improvement and a fifteen percent sequential improvement. Operating income for the quarter included $1.1 million of legal expenses associated with the previously disclosed trade secret litigation resulting in total associated legal expenses for the full fiscal year of $4.6 million.
The Aftermarket Services segment reported net sales for fiscal year 2010 of $225.0 million, compared to $254.6 million for the prior fiscal year, a decrease of twelve percent. For the fourth quarter of fiscal year 2010, net sales decreased six percent to $58.5 million from $62.1 million for the prior fiscal year period. Operating income for fiscal year 2010 was $11.1 million, compared to $10.9 million for the prior fiscal year, an increase of two percent. For the fourth quarter, operating income increased 104 percent to $3.8 million versus $1.9 million for the prior fiscal year quarter. Operating margin for the quarter increased to seven percent, a 116 percent year over year improvement and a 141 percent sequential improvement.
In commenting on the outlook for fiscal year 2011, Mr. Ill said, "We are entering our new fiscal year with a strong backlog and a very solid balance sheet. Based on current aircraft production rates, we project sales in the range of $1.3 to $1.4 billion and earnings per share from continuing operations for the fiscal year of approximately $4.65 per diluted share, excluding transaction and integration costs from the recently announced agreement to acquire Vought Aircraft Industries, Inc. This guidance does not reflect the earnings and associated accretion which we expect from the Vought acquisition. The number of shares used in computing diluted earnings per share was 17.2 million shares. Included in this guidance is approximately $5.0 million of legal expenses associated with the trade secret litigation, the full year effect of the November, 2009 high yield debt offering and approximately $2.5 million of start up costs related to the Mexican facility, which is in addition to our investment in capital and infrastructure."
Mr. Ill further stated, "Our acquisition of Vought remains on track for a late June/early July close. We are working our way through the various regulatory requirements leading up to a shareholder vote. We are focusing a significant amount of our time on the integration of our two companies and we remain excited about what the acquisition will mean to our combined business, our employees, our customers and our shareholders. We will update our fiscal year 2011 guidance for the inclusion of Vought upon the closing of the acquisition."
As previously announced, Triumph Group will hold a conference call tomorrow at 8:30 a.m. (ET) to discuss the fiscal year 2010 fourth quarter and year-end 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 April 29th until May 6th by calling (888)266-2081 (Domestic) or (703)925-2533 (International), passcode #1449287.
Triumph Group, Inc., headquartered in Wayne, Pennsylvania, designs, engineers, manufactures, repairs and overhauls aircraft components and accessories. 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 http://www.triumphgroup.com.
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 expectations of future aerospace market conditions, aircraft production rates, financial and operational performance, revenue and earnings growth, sales and earnings results for fiscal 2011 and the closing of the Vought acquisition and its impact. 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's reports filed with the SEC, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2009.
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
Non-GAAP Financial Measure Disclosures
We prepare and publicly release quarterly unaudited financial statements prepared in accordance with GAAP. In accordance with recent 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 EBITDA, which is our income from continuing operations before interest, income taxes, depreciation and amortization. We disclose 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 EBITDA as an operating performance measure and as such we believe that the GAAP financial measure most directly comparable to it is income from continuing operations. In calculating EBITDA, we exclude from income from continuing operations 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. 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 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 EBITDA to income from continuing operations 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 EBITDA.
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 income from continuing operations has included significant charges for depreciation and amortization. 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 EBITDA helps investors meaningfully evaluate and compare our performance from quarter to quarter and from year to year. We also believe EBITDA is a measure of our ongoing operating performance because the isolation of non-cash charges, such as 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 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 income from continuing operations to calculate EBITDA and the material limitations associated with using this non-GAAP financial measure as compared to income from continuing operations:
SOURCE: Triumph Group, Inc.
Triumph Group, Inc.