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Triumph Group Reports Record Second Quarter Fiscal 2008 Results

  • Net sales from continuing operations for the second quarter fiscal 2008 increased 26% to $279.8 million


  • Operating income from continuing operations for the second quarter fiscal 2008 increased 35% to $31.8 million, reflecting improvement in operating margin Backlog increased 14% over prior year to $1.2 billion


  • Income from continuing operations for the second quarter fiscal 2008 increased 41% to $18.7 million, or $1.05 per diluted share, computed on 9.3% higher share count


  • Net income for the second quarter fiscal 2008 increased 37% to $17.2 million, or $0.97 per diluted share, inclusive of loss of $0.08 per diluted share from discontinued operations

    WAYNE, Pa., Oct 24, 2007 (BUSINESS WIRE) -- Triumph Group, Inc. (NYSE:TGI) today reported that net sales from continuing operations for the second quarter of the fiscal year ending March 31, 2008 totaled $279.8 million, a twenty-six percent increase from last year's second quarter net sales of $221.8 million. Income from continuing operations for the second quarter of fiscal year 2008 increased forty-one percent to $18.7 million, or $1.05 per diluted share, versus $13.3 million, or $0.81 per diluted share, for the second quarter of the prior year. Net income for the second quarter of fiscal year 2008 increased thirty-seven percent to $17.2 million, or $0.97 per diluted share, versus $12.6 million, or $0.77 per diluted share, for the second quarter of the prior year. The number of shares used in computing diluted earnings per share for the second quarter of fiscal 2008 increased to 17.8 million shares. During the quarter, the company generated $15.2 million of cash flow from operations.

    Net sales from continuing operations for the first six months of fiscal year 2008 were $554.8 million, a twenty-six percent increase over net sales of $439.8 million last year. Income from continuing operations for the first six months of fiscal year 2008 increased fifty-four percent to $36.5 million, or $2.08 per diluted share, compared to income from continuing operations of $23.7 million, or $1.46 per diluted share, in the prior year period. Net income for the first six months of fiscal year 2008 increased forty-one percent to $31.1 million, or $1.78 per diluted share, compared to net income of $22.0 million, or $1.35 per diluted share, in the prior year period. During the six months ended September 30, 2007, the company generated $4.3 million of cash flow from operations.

    The company previously announced that it has designated Triumph Precision and Triumph Precision Castings as discontinued operations, effective June 30, 2007. The company completed the sale of Triumph Precision for cash during the quarter, generating proceeds of $4.9 million, and is continuing the process of divesting Triumph Precision Castings. For the three months ended September 30, 2007, the loss from discontinued operations was $1.5 million, or $0.08 per diluted share, which included $0.2 million of charges related to the sale of Triumph Precision.

    The Aerospace Systems segment reported net sales for the quarter of $220.5 million compared to $178.5 million in the prior year period, a twenty-four percent increase. Operating income for the second quarter of fiscal year 2008 was $31.1 million, compared to $25.3 million for the prior year period, a twenty-three percent increase. Organic sales growth for the quarter was twenty percent. Operating income for the quarter included $2.3 million of legal expenses associated with the ongoing trade secret litigation, an increase in excess of $1.0 million over the prior year period. Without these additional costs, operating margins would have improved year over year.

    The Aftermarket Services segment reported net sales for the quarter of $60.1 million, compared to $44.0 million in the prior year period, a thirty-six percent increase. Operating income for the second quarter of fiscal year 2008 was $4.8 million, compared to $2.2 million for the prior year period, a 118 percent increase. Operating margins for the quarter improved to eight percent from five percent in the prior year period. Organic sales growth for the quarter was seventeen percent.

    Richard C. Ill, Triumph's President and Chief Executive Officer, said, "We had another strong quarter marked by record sales, operating income and underlying margin improvement in spite of substantially higher legal costs. In addition, we were able to deliver record earnings per share despite the significantly higher share count resulting primarily from our convertible debt. For the balance of the fiscal year, we expect to continue to generate sales growth and improved profitability."

    Commenting on the outlook for the year, Mr. Ill stated, "Given our strong performance in the quarter and year-to-date and our confidence in the remainder of the year, we now expect our full-year earnings per share from continuing operations to be in the range of $3.95 to $4.10, computed on 17.9 million shares."

    Under the terms of the company's convertible debt, the increase in the stock price, in addition to driving greater dilution, triggered a provision which gave holders of the notes a put option through December 31, 2007, as described in our press release dated October 2, 2007. Accordingly, the balance sheet classification of the notes will be short term for as long as the put option remains in effect.

    As previously announced, Triumph Group will hold a conference call tomorrow at 8:30 a.m. (ET) to discuss the fiscal year 2008 second quarter 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 October 25th until November 1st by calling (888) 266-2081 (Domestic) or (703) 925-2533 (International), passcode #1151410.

    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 Internet 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 financial and operational performance, revenue and earnings growth, margin improvement and sales and earnings results for fiscal 2008. 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, 2007.

                          FINANCIAL DATA (UNAUDITED)
    
                     TRIUMPH GROUP, INC. AND SUBSIDIARIES
                    (in thousands, except per share data)
    
                                 Three Months Ended    Six Months Ended
                                    September 30,        September 30,
                                 ------------------- ---------------------
    
    CONDENSED STATEMENTS OF
     INCOME                        2007      2006      2007       2006
                                 --------- --------- ---------  ---------
    
    
    Net Sales                    $279,772  $221,809  $554,776   $439,805
    
    Operating Income               31,843    23,602    62,097     42,820
    
    Interest Expense and Other      3,566     3,102     6,773      6,160
    Income Tax Expense              9,575     7,228    18,811     12,922
                                 --------- --------- ---------  ---------
    
    Income from Continuing
     Operations                    18,702    13,272    36,513     23,738
    Loss from Discontinued
     Operations, net of tax        (1,472)     (661)   (5,366)    (1,694)
                                 --------- --------- ---------  ---------
    
    Net Income                   $ 17,230  $ 12,611  $ 31,147   $ 22,044
                                 ========= ========= =========  =========
    
    Earnings Per Share - Basic:
    
    Income from Continuing
     Operations                  $   1.13  $   0.82  $   2.21   $   1.47
    Loss from Discontinued
     Operations                    ($0.09)   ($0.04)   ($0.33)    ($0.11)
                                 --------- --------- ---------  ---------
    Net Income                   $   1.04  $   0.78  $   1.89 * $   1.37 *
                                 ========= ========= =========  =========
    
    Weighted average common
     shares outstanding - Basic    16,524    16,166    16,491     16,121
                                 ========= ========= =========  =========
    
    Earnings Per Share -
     Diluted:
    
    Income from Continuing
     Operations                  $   1.05  $   0.81  $   2.08   $   1.46
    Loss from Discontinued
     Operations                    ($0.08)   ($0.04)   ($0.31)    ($0.10)
                                 --------- --------- ---------  ---------
    Net Income                   $   0.97  $   0.77  $   1.78 * $   1.35 *
                                 ========= ========= =========  =========
    
    Weighted average common
     shares outstanding -
     Diluted                       17,827    16,314    17,539     16,299
                                 ========= ========= =========  =========
    
    Dividends declared and paid
     per common share            $   0.04  $   0.04  $   0.08   $   0.04
                                 ========= ========= =========  =========
    
    * Difference due to rounding.
    
    
                          FINANCIAL DATA (UNAUDITED)
    
                     TRIUMPH GROUP, INC. AND SUBSIDIARIES
                (dollars in thousands, except per share data)
    
    BALANCE SHEET
                                              September 30,   March 31,
                                                  2007           2007
                                              ------------- --------------
                     Assets
    Cash                                      $       9,128 $       7,243
    Accounts Receivable, net                        176,835       168,372
    Inventory                                       334,526       296,080
    Deferred Income Taxes                            11,147        11,316
    Assets Held for Sale                             21,985        28,643
    Prepaid Expenses and Other                        5,368         6,713
                                              ------------- --------------
      Current Assets                                558,989       518,367
    
    Property and Equipment, net                     289,177       283,681
    Goodwill                                        339,165       339,930
    Intangible Assets, net                           64,941        69,919
    Other                                            14,732        17,261
                                              ------------- --------------
    
    Total Assets                              $   1,267,004 $   1,229,158
                                              ============= ==============
    
       Liabilities & Stockholders' Equity
    
    Accounts Payable                          $     102,148 $     101,332
    Accrued Expenses                                 65,568        75,582
    Liabilities Related to Assets Held for
     Sale                                             4,243         7,545
    Income Taxes Payable                                827         1,484
    Current Portion of Long-Term Debt               201,471         5,702
                                              ------------- --------------
      Current Liabilities                           374,257       191,645
    
    Long-Term Debt, less current portion            125,329       310,481
    Deferred Income Taxes and Other                 102,258        99,669
    
    Stockholders' Equity:
      Common Stock, $.001 par value,
       50,000,000 shares authorized,
       16,708,100 and 16,469,617 shares
       issued                                            16            16
      Capital in excess of par value                285,515       278,177
      Accumulated other comprehensive income
       (loss)                                           815          (120)
      Retained earnings                             378,814       349,290
                                              ------------- --------------
        Total Stockholders' Equity                  665,160       627,363
                                              ------------- --------------
    
    Total Liabilities and Stockholders'
     Equity                                   $   1,267,004 $   1,229,158
                                              ============= ==============
    
    
                          FINANCIAL DATA (UNAUDITED)
    
                     TRIUMPH GROUP, INC. AND SUBSIDIARIES
                            (dollars in thousands)
    
    SEGMENT DATA                   Three Months Ended   Six Months Ended
                                      September 30,       September 30,
                                   ------------------- -------------------
    
                                     2007      2006      2007      2006
                                   --------- --------- --------- ---------
    
    Net Sales:
      Aerospace Systems            $220,511  $178,520  $437,791  $351,093
      Aftermarket Services           60,054    44,035   118,367    90,482
      Elimination of inter-segment
       sales                           (793)     (746)   (1,382)   (1,770)
                                   --------- --------- --------- ---------
                                   $279,772  $221,809  $554,776  $439,805
                                   ========= ========= ========= =========
    
    Operating Income (Loss):
      Aerospace Systems            $ 31,135  $ 25,332  $ 61,464  $ 45,673
      Aftermarket Services            4,825     2,216    10,553     5,205
      Corporate                      (4,117)   (3,946)   (9,920)   (8,058)
                                   --------- --------- --------- ---------
                                   $ 31,843  $ 23,602  $ 62,097  $ 42,820
                                   ========= ========= ========= =========
    
    Depreciation and Amortization:
      Aerospace Systems            $  7,353  $  6,298  $ 14,611  $ 12,649
      Aftermarket Services            3,034     2,128     6,236     4,155
      Corporate                          70        67       133       111
                                   --------- --------- --------- ---------
                                   $ 10,457  $  8,493  $ 20,980  $ 16,915
                                   ========= ========= ========= =========
    
    
    Capital Expenditures:
      Aerospace Systems            $  6,531  $  8,091  $ 13,657  $ 14,798
      Aftermarket Services            5,034     4,818     7,331    10,903
      Corporate                         134        20       545       145
                                   --------- --------- --------- ---------
                                   $ 11,699  $ 12,929  $ 21,533  $ 25,846
                                   ========= ========= ========= =========
    
    
                          FINANCIAL DATA (UNAUDITED)
    
                     TRIUMPH GROUP, INC. AND SUBSIDIARIES
                            (dollars in thousands)
    
    Non-GAAP Financial Measure Disclosures
    
    
    Earnings before Interest, Taxes, Depreciation and Amortization
     ("EBITDA") for the three months ended September 30, 2007 was $42.3
     million with a margin of 15.1%. EBITDA for the three months ended
     September 30, 2006 was $32.1 million with a margin of 14.5%. EBITDA
     for the six months ended September 30, 2007 was $83.1 million with a
     margin of 15.0%. EBITDA for the six months ended September 30, 2006
     was $59.7 million with a margin of 13.6%.
    
    Management believes that EBITDA provides the reader a good measure of
     cash generated from the operations of the business before any
     investment in working capital or fixed assets.
    
    The following definition is provided for the non-GAAP financial
     measure identified above, together with a reconciliation of such non-
     GAAP financial measure to the most directly comparable financial
     measure calculated and presented in accordance with GAAP.
    
                                   Three Months Ended   Six Months Ended
                                      September 30,       September 30,
                                   ------------------- -------------------
                                     2007      2006      2007      2006
                                   --------- --------- --------- ---------
    Earnings before Interest,
     Taxes, Depreciation and
     Amortization (EBITDA):
    
      Income from Continuing
       Operations                  $ 18,702  $ 13,272  $ 36,513  $ 23,738
    
      Add-back:
         Income Tax Expense           9,575     7,228    18,811    12,922
         Interest Expense and
          Other                       3,566     3,102     6,773     6,160
         Depreciation and
          Amortization               10,457     8,493    20,980    16,915
                                   --------- --------- --------- ---------
    
      Earnings before Interest,
       Taxes, Depreciation and
       Amortization ("EBITDA")     $ 42,300  $ 32,095  $ 83,077  $ 59,735
                                   --------- --------- --------- ---------
    
      Net Sales                    $279,772  $221,809  $554,776  $439,805
                                   --------- --------- --------- ---------
    
      EBITDA Margin                    15.1%     14.5%     15.0%     13.6%
                                   ========= ========= ========= =========
    
    
                          FINANCIAL DATA (UNAUDITED)
    
                     TRIUMPH GROUP, INC. AND SUBSIDIARIES
                            (dollars in thousands)
    
    Non-GAAP Financial Measure Disclosures (continued)
    
    Earnings before
     Interest, Taxes,
     Depreciation and
     Amortization (EBITDA):      Three Months Ended September 30, 2007
                             ---------------------------------------------
                                                  Segment Data
                                       -----------------------------------
                                       Aerospace Aftermarket Corporate /
                               Total    Systems    Services   Eliminations
                             --------- --------- ----------- -------------
    
      Income from Continuing
       Operations            $ 18,702
    
      Add-back:
         Income Tax Expense     9,575
         Interest Expense
          and Other             3,566
                             ---------
    
      Operating Income
       (Expense)             $ 31,843  $ 31,135  $    4,825       ($4,117)
    
         Depreciation and
          Amortization         10,457     7,353       3,034            70
                             --------- --------- ----------- -------------
    
      Earnings (Losses)
       before Interest,
       Taxes, Depreciation
       and Amortization
       ("EBITDA")            $ 42,300  $ 38,488  $    7,859       ($4,047)
                             ========= ========= =========== =============
    
      Net Sales              $279,772  $220,511  $   60,054         ($793)
                             ========= ========= =========== =============
    
      EBITDA Margin              15.1%     17.5%       13.1%          n/a
                             ========= ========= =========== =============
    
    
    Earnings before
     Interest, Taxes,
     Depreciation and
     Amortization (EBITDA):       Six Months Ended September 30, 2007
                             ---------------------------------------------
                                                  Segment Data
                                       -----------------------------------
                                       Aerospace Aftermarket Corporate /
                               Total    Systems    Services   Eliminations
                             --------- --------- ----------- -------------
    
      Income from Continuing
       Operations            $ 36,513
    
      Add-back:
         Income Tax Expense    18,811
         Interest Expense
          and Other             6,773
                             ---------
    
      Operating Income
       (Expense)             $ 62,097  $ 61,464  $   10,553       ($9,920)
    
         Depreciation and
          Amortization         20,980    14,611       6,236           133
                             --------- --------- ----------- -------------
    
      Earnings (Losses)
       before Interest,
       Taxes, Depreciation
       and Amortization
       ("EBITDA")            $ 83,077  $ 76,075  $   16,789       ($9,787)
                             ========= ========= =========== =============
    
      Net Sales              $554,776  $437,791  $  118,367       ($1,382)
                             ========= ========= =========== =============
    
      EBITDA Margin              15.0%     17.4%       14.2%          n/a
                             ========= ========= =========== =============
    
    
                          FINANCIAL DATA (UNAUDITED)
    
                     TRIUMPH GROUP, INC. AND SUBSIDIARIES
                            (dollars in thousands)
    
    Non-GAAP Financial Measure 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:
    
                                               September 30,   March 31,
                                                   2007          2007
                                               ------------- -------------
    
    Calculation of Net Debt
    ------------------------------------------
    Current Portion                            $    201,471  $      5,702
    Long-term debt                                  125,329       310,481
                                               ------------- -------------
    Total Debt                                      326,800       316,183
    Less: Cash                                        9,128         7,243
                                               ------------- -------------
    Net Debt                                   $    317,672  $    308,940
                                               ============= =============
    
    Calculation of Capital
    ------------------------------------------
    Net Debt                                   $    317,672  $    308,940
    Stockholders' equity                            665,160       627,363
                                               ------------- -------------
    Total Capital                              $    982,832  $    936,303
                                               ============= =============
    
    Percent of Net Debt to Capital                     32.3%         33.0%
    
    

    SOURCE: Triumph Group, Inc.

    Triumph Group, Inc.
    Sheila Spagnolo
    Vice President
    610-251-1000
    sspagnolo@triumphgroup.com