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Triumph Group Reports Strong Third Quarter Fiscal 2009 Earnings; Affirms Fiscal Year 2009 Guidance
WAYNE, Pa., Jan 29, 2009 (BUSINESS WIRE) -- Triumph Group, Inc. (NYSE: TGI):

  • Net sales for the third quarter fiscal 2009 increased 4% over the prior fiscal year to $285.2 million
  • Operating income for the third quarter fiscal 2009 increased 6% to $30.4 million, reflecting an operating margin of 10.7%
  • Backlog increased to $1.28 billion, an increase of 4% over prior year and 2% sequentially
  • Earnings per share from continuing operations increased 33% to $1.33 per diluted share
  • Net income per share increased 37% to $1.28 per diluted share

Triumph Group, Inc. (NYSE: TGI) today reported that net sales for the third quarter of fiscal year ending March 31, 2009 totaled $285.2 million, a four percent increase from last year's third quarter net sales of $275.1 million. Income from continuing operations for the third quarter of fiscal year 2009 increased twenty-two percent to $21.9 million, or $1.33 per diluted share, versus $17.9 million, or $1.00 per diluted share, for the third quarter of the prior fiscal year. Net income for the third quarter of fiscal year 2009 increased twenty-six percent to $21.1 million, or $1.28 per diluted share, versus $16.7 million, or $0.93 per diluted share, for the third quarter of the prior fiscal year. The number of shares used in computing diluted earnings per share for the third quarter of fiscal year 2009 was 16.6 million shares. During the quarter, the company generated $25.8 million of cash flow from operations.

Net sales for the first nine months of fiscal year 2009 were $929.2 million, a twelve percent increase over net sales of $829.9 million last fiscal year. Income from continuing operations for the first nine months of fiscal year 2009 increased thirty-six percent to $74.0 million, or $4.47 per diluted share. Net income for the first nine months of fiscal year 2009 increased forty-eight percent to $70.9 million, or $4.28 per diluted share. During the nine months ended December 31, 2008, the company generated $76.8 million of cash flow from operations.

The Aerospace Systems segment reported net sales for the quarter of $222.8 million compared to $213.0 million in the prior year period, an increase of five percent. Current quarter sales were impacted by an estimated $26.0 million due to the machinists strike at Boeing. The organic sales growth for the quarter was estimated to be approximately nine percent after adjusting for the effect of the Boeing strike. Operating income for the third quarter of fiscal year 2009 was $34.3 million, compared to $26.1 million for the prior year period, a thirty-one percent increase. Operating margin increased from twelve percent in the prior year's third quarter to fifteen percent. Operating income for the quarter included $0.6 million of legal expenses associated with the ongoing trade secret litigation. The segment's operating results were impacted by a number of unusual items including the Boeing strike, a charge to align the treatment of non-recurring engineering costs, a charge to terminate a defined benefit pension plan and a favorable settlement of a retroactive pricing agreement. The net unfavorable impact of these items on the quarter's operating income was estimated to be approximately $2.8 million.

The Aftermarket Services segment reported net sales for the quarter of $63.1 million, compared to $62.7 million in the prior year period, a one percent increase, all of which was organic. Operating income for the third quarter of fiscal year 2009 was $2.2 million, compared to $6.5 million for the prior year period, a sixty-six percent decrease. The segment's results continue to be significantly impacted by losses at the Phoenix APU operations resulting from residual execution issues. Excluding these operations, the segment's year over year revenue growth was fifteen percent and operating margin was in excess of ten percent.

During the quarter, the company retired $10.0 million of its convertible notes for $8.2 million cash and recorded a $1.8 million pre-tax gain on the early extinguishment of the debt. Also, during the quarter, the company wrote off $0.5 million of acquisition-related costs on a potential acquisition that was not consummated. The effective tax rate for the quarter was lower than the prior fiscal year primarily as a result of the retroactive reinstatement of the research and development tax credit.

Richard C. Ill, Triumph's President and Chief Executive Officer, said, "We are very proud of the results achieved during the third quarter. We delivered strong cash flow and earnings despite the impact of the Boeing strike, which affected shipments throughout our company for a longer period than we originally projected. Our management of working capital continues to improve and we remain focused on controlling costs. We believe that our broad and diverse product offerings and our underlying entrepreneurial culture allow us to capitalize on new opportunities that may present themselves in this uncertain environment."

In commenting on the outlook for fiscal year 2009, Mr. Ill said, "We are maintaining our prior guidance that earnings per share from continuing operations for the fiscal year will be in excess of $5.40 per diluted share, computed on approximately 16.7 million shares. This guidance reflects our strong backlog position as well as the short term challenges associated with resumption of production following the Boeing strike and the impact of the delay in production of the Boeing 747-8 and 787 aircrafts."

As previously announced, Triumph Group will hold a conference call tomorrow at 8:30 a.m. (ET) to discuss the fiscal year 2009 third 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 January 30th until February 6th by calling (888) 266-2081 (Domestic) or (703) 925-2533 (International), passcode #1323587.

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, financial and operational performance, revenue and earnings growth, future operating margins and sales and earnings results for fiscal 2009. 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, 2008.

       
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 2008 2007 2008 2007
 
 
Net Sales $ 285,243 $ 275,099 $ 929,190 $ 829,875
 
Operating Income 30,431 28,726 116,473 90,823
 
Interest Expense and Other 3,305 3,310 9,799 10,083
Gain on Early Extinguishment of Debt (1,777 ) 0 (1,777 ) 0
Income Tax Expense   6,957     7,493     34,402     26,304  
 
Income from Continuing Operations 21,946 17,923 74,049 54,436
Loss from Discontinued Operations, net of tax   (818 )   (1,206 )   (3,114 )   (6,572 )
 
Net Income $ 21,128   $ 16,717   $ 70,935   $ 47,864  
 
Earnings Per Share - Basic:
 
Income from Continuing Operations $ 1.34 $ 1.08 $ 4.52 $ 3.30
Loss from Discontinued Operations   ($0.05 )   ($0.07 )   ($0.19 )   ($0.40 )
Net Income $ 1.29   $ 1.01   $ 4.33   $ 2.90  
 
Weighted average common shares outstanding - Basic   16,387     16,563     16,382     16,515  
 
Earnings Per Share - Diluted:
 
Income from Continuing Operations $ 1.33 $ 1.00 $ 4.47 $ 3.07
Loss from Discontinued Operations   ($0.05 )   ($0.07 )   ($0.19 )   ($0.37 )
Net Income $ 1.28   $ 0.93   $ 4.28   $ 2.70  
 
Weighted average common shares outstanding - Diluted   16,551     18,002     16,584     17,706  
 
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
December 31, March 31,
2008 2008
Assets
Cash $ 16,828 $ 13,738
Accounts Receivable, net 180,343 207,975
Inventory 366,026 350,937
Rotable Assets (1) 26,262 23,392
Deferred Income Taxes 67 1,450
Assets Held for Sale 29,834 24,763
Prepaid Expenses and Other   6,993     5,207  
Current Assets 626,353 627,462
 
Property and Equipment, net 311,753 311,433
Goodwill 383,873 383,740
Intangible Assets, net 69,725 78,488
Other   13,454     13,712  
 
Total Assets $ 1,405,158   $ 1,414,835  
 
Liabilities & Stockholders' Equity
 
Accounts Payable $ 79,295 $ 120,117
Accrued Expenses 78,219 83,397
Liabilities Related to Assets Held for Sale 3,535 4,587
Income Taxes Payable 796 1,509
Current Portion of Long-Term Debt   79,562     1,010  
Current Liabilities 241,407 210,620
 
Long-Term Debt, less current portion 297,291 418,803
Income Taxes Payable, non-current 1,472 1,437
Deferred Income Taxes and Other 106,340 91,246
 
Stockholders' Equity:

Common Stock, $.001 par value, 50,000,000 shares authorized, 16,763,984 and 16,731,324 shares issued

16 16
Capital in excess of par value 290,565 288,154
Treasury Stock, at cost, 187,207 and 213,950 shares (10,503 ) (12,003 )
Accumulated other comprehensive income (626 ) 2,950
Retained earnings   479,196     413,612  
Total Stockholders' Equity   758,648     692,729  
 
Total Liabilities and Stockholders' Equity $ 1,405,158   $ 1,414,835  
 
 

(1)

Rotable assets, which include assets that can be repaired and reused in exchange transactions through our maintenance, repair and overhaul services, of $23,392 as of March 31, 2008, includes $10,730 and $12,662 that were previously reported in inventory and property and equipment, net, respectively.

 
 
FINANCIAL DATA (UNAUDITED)
         
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
 
 
 
SEGMENT DATA Three Months Ended Nine Months Ended
December 31, December 31,
 
  2008     2007     2008     2007  
 
Net Sales:
Aerospace Systems $ 222,751 $ 213,025 $ 738,552 $ 650,816
Aftermarket Services 63,107 62,728 192,556 181,095
Elimination of inter-segment sales   (615 )   (654 )   (1,918 )   (2,036 )
$ 285,243   $ 275,099   $ 929,190   $ 829,875  
 
Operating Income (Loss):
Aerospace Systems $ 34,269 $ 26,095 $ 126,854 $ 87,559
Aftermarket Services 2,219 6,519 9,002 17,072
Corporate   (6,057 )   (3,888 )   (19,383 )   (13,808 )
$ 30,431   $ 28,726   $ 116,473   $ 90,823  
 
Depreciation and Amortization:
Aerospace Systems $ 8,498 $ 7,423 $ 25,888 $ 22,034
Aftermarket Services 3,171 3,266 10,206 9,502
Corporate   58     64     191     197  
$ 11,727   $ 10,753   $ 36,285   $ 31,733  
 
 
Capital Expenditures:
Aerospace Systems $ 6,097 $ 12,219 $ 24,008 $ 25,876
Aftermarket Services 1,684 2,715 6,676 8,365
Corporate   81     162     568     707  
$ 7,862   $ 15,096   $ 31,252   $ 34,948  
 
 
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 December 31, 2008 was $42.2 million with a margin of 14.8%. EBITDA for the three months ended December 31, 2007 was $39.5 million with a margin of 14.4%. EBITDA for the nine months ended December 31, 2008 was $152.8 million with a margin of 16.4%. EBITDA for the nine months ended December 31, 2007 was $122.6 million with a margin of 14.8%.
 
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 Nine Months Ended
December 31, December 31,
  2008       2007     2008       2007  
Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA):
 
Income from Continuing Operations $ 21,946 $ 17,923 $ 74,049 $ 54,436
 
Add-back:
Income Tax Expense 6,957 7,493 34,402 26,304

Gain on Early Extinguishment of Debt

(1,777 ) 0 (1,777 ) 0
Interest Expense and Other 3,305 3,310 9,799 10,083
Depreciation and Amortization   11,727     10,753     36,285     31,733  
 

Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA")

$ 42,158   $ 39,479   $ 152,758   $ 122,556  
 
Net Sales $ 285,243   $ 275,099   $ 929,190   $ 829,875  
 
EBITDA Margin   14.8 %   14.4 %   16.4 %   14.8 %
 
 

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 December 31, 2008
Segment Data
Total

Aerospace
Systems

Aftermarket
Services

Corporate /
Eliminations

 
Income from Continuing Operations

$

21,946

 
Add-back:
Income Tax Expense 6,957

Gain on Early Extinguishment of Debt

(1,777 )
Interest Expense and Other   3,305  
 
Operating Income (Expense) $ 30,431 $ 34,269 $ 2,219 ($6,057 )
 
Depreciation and Amortization   11,727     8,498     3,171   58  
 

 

Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("EBITDA")

$ 42,158   $ 42,767   $ 5,390   ($5,999 )
 
Net Sales $ 285,243   $ 222,751   $ 63,107   ($615 )
 
EBITDA Margin   14.8 %   19.2 %   8.5 % n/a  
 
 

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

Nine Months Ended December 31, 2008
Segment Data
Total

Aerospace
Systems

Aftermarket
Services

Corporate /
Eliminations

 
Income from Continuing Operations $ 74,049
 
Add-back:
Income Tax Expense 34,402
Gain on Early Extinguishment of Debt (1,777 )
Interest Expense and Other   9,799  
 
Operating Income (Expense) $ 116,473 $ 126,854 $ 9,002 ($19,383 )
 
Depreciation and Amortization   36,285     25,888     10,206   191  
 

Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("EBITDA")

$ 152,758   $ 152,742   $ 19,208   ($19,192 )
 
Net Sales $ 929,190   $ 738,552   $ 192,556   ($1,918 )
 
EBITDA Margin   16.4 %   20.7 %   10.0 % n/a  
 
       

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 December 31, 2007
Segment Data
Total

Aerospace
Systems

Aftermarket
Services

Corporate /
Eliminations

 
Income from Continuing Operations $ 17,923
 
Add-back:
Income Tax Expense 7,493
Interest Expense and Other   3,310  
 
Operating Income (Expense) $ 28,726 $ 26,095 $ 6,519 ($3,888 )
 
Depreciation and Amortization   10,753     7,423     3,266   64  
 

Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("EBITDA")

$ 39,479   $ 33,518   $ 9,785   ($3,824 )
 
Net Sales $ 275,099   $ 213,025   $ 62,728   ($654 )
 
EBITDA Margin   14.4 %   15.7 %   15.6 % n/a  
 
 

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

Nine Months Ended December 31, 2007
Segment Data
Total

Aerospace
Systems

Aftermarket
Services

Corporate /
Eliminations

 
Income from Continuing Operations $ 54,436
 
Add-back:
Income Tax Expense 26,304
Interest Expense and Other   10,083  
 
Operating Income (Expense) $ 90,823 $ 87,559 $ 17,072 ($13,808 )
 
Depreciation and Amortization   31,733     22,034     9,502   197  
 

Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("EBITDA")

$ 122,556   $ 109,593   $ 26,574   ($13,611 )
 
Net Sales $ 829,875   $ 650,816   $ 181,095   ($2,036 )
 
EBITDA Margin   14.8 %   16.8 %   14.7 % n/a  
 
FINANCIAL DATA (UNAUDITED)
   
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
 
Non-GAAP Financial Measure Disclosures (continued)
 

Management believes that "Net Debt to Capital" provides the reader a good measure of financial leverage. The following table sets forth the computation of Net Debt to Capital:

 
   
December 31, March 31,
2008 2008
 

Calculation of Net Debt

Current Portion $ 79,562 $ 1,010
Long-term debt   297,291     418,803  
Total Debt 376,853 419,813
Less: Cash   16,828     13,738  
Net Debt $ 360,025   $ 406,075  
 

Calculation of Capital

Net Debt $ 360,025 $ 406,075
Stockholders' equity   758,648     692,729  
Total Capital $ 1,118,673   $ 1,098,804  
 
Percent of Net Debt to Capital 32.2 % 37.0 %
 

SOURCE: Triumph Group, Inc.

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