Triumph to receive lump sum payment of $160 million plus assets
required to run the business
Programs expected to be immediately accretive to Triumph’s earnings
per share and enhance current fiscal year consolidated free cash flow
New agreements with Gulfstream and Israel Aerospace Industries (“IAI”)
facilitate and support the transaction
Triumph will continue to produce wings in Tulsa, Oklahoma facility
with support of existing technical and operational resources
BERWYN, Pa.--(BUSINESS WIRE)--Dec. 9, 2014--
Triumph Group, Inc. (NYSE:TGI) today announced the signing of a
definitive agreement with Spirit AeroSystems Holdings, Inc. (NYSE: SPR)
(“Spirit”) under which Triumph will take over production of the
Gulfstream G650 and G280 wing programs located in Tulsa, Oklahoma. The
transaction is targeted to close by calendar year end, subject to
customary closing conditions.
Under the terms of the agreement, Triumph will receive $160 million in
cash plus assets required to run the business from Spirit to cover the
anticipated future cash flow needs of the programs, with no additional
capital contributions expected by Triumph. The company expects the
programs to be initially cash flow negative, with operating cash
requirements anticipated to decrease over the first three years and
becoming cash flow positive in year four. The business will be included
in the Aerostructures Group segment and is expected to add approximately
$250 million in annual revenue and to be immediately accretive to
Triumph’s earnings per share upon closing, reflecting initial estimates
of purchase accounting adjustments and excluding synergies resulting
from the transaction and transaction related expenses.
The addition of these programs will position Triumph as a leader in
fully integrated wing design, engineering and production and further its
standing as a strategic Tier One Capable aerostructures supplier.
Following completion of the transaction, Triumph will be a major
provider of wings to Gulfstream, supplying four of Gulfstream’s five
in-production programs (G280, G450, G550 and G650). Triumph believes
that it is also significant that both programs are past critical design
and early production phases, with substantial investment and risk
already experienced. As a result, the company believes it is assuming
the G650 and G280 programs at an advantageous point.
“We conducted a thorough evaluation of the G650 and G280 programs and,
given our experience and success on other Gulfstream wing production
programs, we believe we have an opportunity to deliver value to
Gulfstream, IAI and to our shareholders,” said Jeffry D. Frisby,
Triumph’s President and Chief Executive Officer. “These programs are a
logical extension of Triumph’s core capability in complex
aerostructures, including completed wing production and assembly. We are
confident in our strategy to drive long-term value from these programs
and see additional upside opportunities, as the programs are in the
early stages of their expected multi-decade production lives. We look
forward to expanding our relationship with Gulfstream and IAI and
working closely with them to make these programs productive.”
Larry Flynn, President, Gulfstream Aerospace Corporation, said, “We are
pleased with this agreement, which is important to the successful
development of our G650 and G280 business jet programs. We know Triumph
well based on our experience with them on the G450 and G550 wings and
have confidence that their knowledge and capabilities make them the
right partner to take on these programs. We look forward to continuing
our business relationship with Triumph into the future.”
Upon the close of the transaction, production will continue out of
Spirit’s Tulsa facility and Triumph will look to utilize its
manufacturing experience, resources and wing design engineering
capabilities as appropriate to supplement the Tulsa operations. The
company will focus on optimizing the build process and cost structure of
the programs, and has identified opportunities for engineering, supply
chain and labor enhancements.
Triumph will hold a conference call today, Tuesday, December 9, 2014 at
11 a.m. (ET) to discuss this announcement. To participate in the call,
please dial (866) 244-4630 (Domestic) or (703) 639-1177 (International).
A slide presentation will be included with the audio portion of the
webcast. An audio replay will be available from December 9, 2014 at 2:00
pm until December 16, 2014 by calling (703) 925-2533 (Domestic) or (888)
266-2081 (International), passcode #1649218.
RBC Capital Markets and Barclays are acting as financial advisors and
Ballard Spahr LLP is acting as legal advisor to Triumph.
About Triumph Group
Triumph Group, Inc., headquartered in Berwyn, Pennsylvania, designs,
engineers, manufactures, repairs and overhauls a broad portfolio of
aerostructures, aircraft 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.
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. 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, including statements of expected revenues, cash
utilization, synergies, accretion to earnings, profitability, program
life or future business growth or development. 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, 2014.
Source: Triumph Group, Inc.
Triumph Group, Inc.
Sheila G. Spagnolo, 610-251-1000
President, Tax & Investor Relations