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Triumph Group Reports Third Quarter Fiscal 2017 Results

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

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