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Triumph Group Reports Second Quarter Fiscal 2015 Earnings
  • Net sales for second quarter fiscal year 2015 increased 3% to a record $994.1 million
  • Operating income for second quarter fiscal year 2015 was $114.7 million and included $7.8 million of costs related to the Jefferson Street/Red Oak facility transition. Excluding these costs, operating income was $122.5 million, reflecting an operating margin of 12%
  • Net income for second quarter fiscal year 2015 was $67.4 million, or $1.32 per diluted share, which included Jefferson Street/Red Oak facility transition costs totaling $7.8 million pre-tax ($0.10 per diluted share). Excluding these costs, earnings per share were $1.42 per diluted share
  • Year-to-date cash flow from operations before pension contributions of $55.4 million was $313.8 million

BERWYN, Pa.--(BUSINESS WIRE)--Oct. 29, 2014-- Triumph Group, Inc. (NYSE: TGI) today reported financial results for its second quarter of fiscal year 2015, which ended September 30, 2014.

“Our second quarter performance reflected our continued focus on execution, cost improvement and cash generation as well as our commitment to meeting our customers’ needs, and we were pleased to achieve record net quarterly revenues,” said Jeffry D. Frisby, Triumph’s President and Chief Executive Officer. “The Aerospace Systems Group and the Aftermarket Services Group delivered positive organic revenue growth and sustained their strong operating margins. While we are making progress in the Aerostructures Group, we remain committed to continue driving performance in order to improve our margins in this segment. The integration of the GE Aviation hydraulic actuation business is progressing well and the recently announced acquisition of Triumph Aviation Services - NAAS Division will accelerate growth in our aftermarket business. We generated strong cash flow during the quarter, enabling us to reduce our debt, take advantage of strategic growth opportunities and opportunistically buy back shares to return capital to our shareholders.”

Net sales for the fiscal second quarter of 2015 were a record $994.1 million, a three percent increase compared to fiscal second quarter 2014 net sales of $967.3 million. Organic sales for the quarter decreased five percent primarily due to production rate cuts on the 747-8, Gulfstream and V-22 programs.

Net income for the second quarter of fiscal year 2015 was $67.4 million, or $1.32 per diluted share, compared to $49.5 million, or $0.94 per diluted share, for the second quarter of the prior fiscal year. Results in the second quarter of fiscal year 2015 included $7.8 million pre-tax ($0.10 per diluted share) of costs related to the Jefferson Street/Red Oak facility transition. Excluding these costs, earnings per share for the second quarter of fiscal year 2015 were $1.42 per diluted share. The prior fiscal year’s quarter included approximately $5.8 million pre-tax ($0.07 per diluted share) of costs related to the Jefferson Street facility move. Excluding these move- related costs, earnings per share for the prior fiscal year’s second quarter were $1.01 per diluted share. The number of shares used in computing diluted earnings per share for the quarter was 51.2 million shares.

Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) for the second quarter of fiscal year 2015 were $138.8 million and reflected an Adjusted EBITDA margin of fourteen percent. This compares to Adjusted EBITDA of $122.3 million and an Adjusted EBITDA margin of thirteen percent in the prior fiscal year’s second quarter.

Net sales for the first six months of fiscal year 2015 were $1.891 billion, down slightly from net sales of $1.911 billion for the comparable period of the last fiscal year. Net income for the first six months of fiscal year 2015 was $195.7 million, or $3.79 per diluted share, versus $128.6 million, or $2.43 per diluted share, in the prior year period. The year-to-date results included costs related to the Jefferson Street/Red Oak facility transition and the refinancing of the Senior Notes due 2018. Also included in the year-to-date results was a gain, net of legal fees, related to the settlement of the Eaton litigation. Excluding these items totaling $95.5 million pre-tax ($1.19 per diluted share), net income for the first six months of fiscal year 2015 was $134.2 million, or $2.60 per diluted share.

During the six months ended September 30, 2014, the company generated $313.8 million of cash flow from operations before pension contributions of $55.4 million; after these contributions, cash flow from operations was $258.4 million.

During the quarter, the company repurchased 636,740 shares of stock under the company’s existing 5.5 million share repurchase authorization. As of September 30, 2014, approximately 3.8 million shares remained under the share repurchase authorization.

Segment Results

Aerostructures

The Aerostructures segment reported net sales of $632.1 million in the second quarter of fiscal year 2015 compared to $690.7 million in the prior year period. Organic sales for the quarter declined seven percent primarily due to production rate cuts on the 747-8, Gulfstream and V-22 programs. Operating income for the second quarter of fiscal year 2015 was $72.2 million, compared to $64.4 million for the prior year period, and included a net unfavorable cumulative catch-up adjustment on long-term contracts of $6.2 million. The segment’s operating results for the quarter also included $7.8 million of pre-tax charges related to the Jefferson Street/Red Oak facility transition as well as a customer settlement charge of $5.0 million. The segment’s operating margin for the quarter was eleven percent. Excluding the Jefferson Street/Red Oak facility transition costs, the segment’s operating margin for the quarter was thirteen percent.

Aerospace Systems

The Aerospace Systems segment reported record net sales of $288.9 million in the second quarter of fiscal year 2015 compared to $205.5 million in the prior year period, an increase of forty-one percent, reflecting the impact of the Triumph Actuation Systems-Yakima and Triumph Actuation Systems-UK and IOM acquisitions completed at the end of the first quarter of fiscal year 2015. Organic sales growth for the quarter was two percent. Operating income for the second quarter of fiscal year 2015 was $46.2 million compared to $31.7 million for the prior year period, an increase of forty-six percent. The segment’s operating margin for the quarter was sixteen percent.

Aftermarket Services

The Aftermarket Services segment reported net sales in the second quarter of fiscal year 2015 of $74.3 million compared to $73.0 million in the prior year period, an increase of two percent, all of which was organic. Operating income for the second quarter of fiscal year 2015 was $11.6 million compared to $10.1 million for the prior year period, an increase of fifteen percent. Operating margin for the quarter was sixteen percent.

Outlook

Mr. Frisby continued, “We remain focused on improving our operational execution while exploring opportunities to strategically expand Triumph’s global presence and achieve balance in our segments, end markets and customers.”

Based on current projected aircraft production rates and a weighted average share count of 51.3 million shares, the company reaffirmed its fiscal year 2015 revenue guidance of $3.8 to $3.9 billion and maintained its full year earnings per share guidance of $5.75 to $5.90 per diluted share, excluding the non-recurring items. The company updated its expectation for Adjusted EBITDA for fiscal year 2015 to $635.0 million to $645.0 million, which excludes the impact of non-recurring items, and expects to generate free cash flow available for debt reduction, acquisitions and share repurchases after pension contributions for the fiscal year of approximately $385.0 million.

Conference Call

Triumph Group will hold a conference call tomorrow, October 30 at 8:30 a.m. (ET) to discuss the fiscal year 2015 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 30th to November 6th by calling (888) 266-2081 (Domestic) or (703) 925-2533 (International), passcode #1645741.

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, including statements of expectations of or assumptions about future aerospace market conditions, aircraft production rates, financial and operational performance, revenue and earnings growth, profitability and earnings results for fiscal year 2015. 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, 2014.

 
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 2014 2013 2014 2013
 
 
Net sales $ 994,123 $ 967,345 $ 1,891,028 $ 1,911,028
 
Operating income 114,698 92,971 355,222 234,317
 
Interest expense and other 15,386 20,321 57,746 40,031
Income tax expense   31,866   23,134   101,786   65,727
 
Net income $ 67,446 $ 49,516 $ 195,690 $ 128,559
 
Earnings per share - basic:
 
Net income $ 1.32 $ 0.96 $ 3.81 $ 2.51
 
Weighted average common shares outstanding - basic   51,015   51,807   51,351   51,311
 
Earnings per share - diluted:
 
Net income $ 1.32 $ 0.94 $ 3.79 $ 2.43
 
Weighted average common shares outstanding - diluted   51,169   52,820   51,627   52,813
 
Dividends declared and paid per common share $ 0.04 $ 0.04 $ 0.08 $ 0.08
 
 
FINANCIAL DATA (UNAUDITED)
   
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except per share data)
 
BALANCE SHEET Unaudited Audited
September 30, March 31,
2014 2014
Assets
Cash and cash equivalents $ 33,366 $ 28,998
Accounts receivable, net 518,958 517,385
Inventory, net of unliquidated progress payments of $167,008 and $165,019 1,234,692 1,109,887
Rotable assets 43,514 41,666
Deferred income taxes 48,919 57,308
Prepaid and other current assets   22,881     24,897  
Current assets 1,902,330 1,780,141
 
Property and equipment, net 963,604 931,430
Goodwill 1,932,491 1,793,539
Intangible assets, net 967,886 978,171
Other, net   49,280     69,914  
 
Total assets $ 5,815,591   $ 5,553,195  
 
Liabilities & Stockholders' Equity
 
Current portion of long-term debt $ 39,595 $ 49,575
Accounts payable 342,002 317,334
Accrued expenses   285,217     273,290  
Current liabilities 666,814 640,199
 
Long-term debt, less current portion 1,516,890 1,500,808
Accrued pension and post-retirement benefits, noncurrent 424,087 508,524
Deferred income taxes, noncurrent 444,357 385,188
Other noncurrent liabilities 409,762 234,565
 
Stockholders' Equity:

Common stock, $.001 par value, 100,000,000 shares authorized, 52,460,920 and 52,459,020 shares issued

51 52
Capital in excess of par value 850,677 866,281
Treasury stock, at cost, 1,673,852 and 300,000 shares (112,152 ) (19,134 )
Accumulated other comprehensive loss (32,114 ) (18,908 )
Retained earnings   1,647,219     1,455,620  
Total stockholders' equity   2,353,681     2,283,911  
 
Total liabilities and stockholders' equity $ 5,815,591   $ 5,553,195  
 
 
FINANCIAL DATA (UNAUDITED)
       
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
 
 
 
SEGMENT DATA Three Months Ended Six Months Ended
September 30, September 30,
 
2014 2013 2014 2013
 
Net sales:
Aerostructures $ 632,072 $ 690,748 $ 1,243,935 $ 1,342,636
Aerospace Systems 288,902 205,483 508,754 425,009
Aftermarket Services 74,343 72,971 141,951 147,324
Elimination of inter-segment sales   (1,194 )   (1,857 )   (3,612 )   (3,941 )
$ 994,123   $ 967,345   $ 1,891,028   $ 1,911,028  
 
Operating income (loss):
Aerostructures $ 72,230 $ 64,425 $ 143,095 $ 164,812
Aerospace Systems 46,214 31,740 83,567 74,383
Aftermarket Services 11,620 10,102 22,124 21,381
Corporate   (15,366 )   (13,296 )   106,436     (26,259 )
$ 114,698   $ 92,971   $ 355,222   $ 234,317  
 
Depreciation and amortization:
Aerostructures $ 24,765 $ 26,483 $ 49,744 $ 52,796
Aerospace Systems 11,147 8,549 20,665 17,088
Aftermarket Services 1,926 1,864 3,803 3,741
Corporate   1,176     1,348     2,353     2,553  
$ 39,014   $ 38,244   $ 76,565   $ 76,178  
 
Amortization of acquired contract liabilities:
Aerostructures $ (4,783 ) $ (5,614 ) $ (9,900 ) $ (11,755 )
Aerospace Systems   (10,082 )   (3,351 )   (13,932 )   (8,360 )
$ (14,865 ) $ (8,965 ) $ (23,832 ) $ (20,115 )
 
Capital expenditures:
Aerostructures $ 23,007 $ 52,598 $ 38,376 $ 98,543
Aerospace Systems 10,588 5,843 16,251 10,275
Aftermarket Services 2,353 3,915 4,033 8,067
Corporate   49     680     414     2,380  
$ 35,997   $ 63,036   $ 59,074   $ 119,265  
 

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:

  • 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 Six Months Ended
September 30, September 30,
2014 2013 2014 2013
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA):
Net Income $ 67,446 $ 49,516 $ 195,690 $ 128,559
 
Add-back:
Income Tax Expense 31,866 23,134 101,786 65,727
Interest Expense and Other 15,386 20,321 57,746 40,031
Gain on Legal Settlement, net - - (134,693 ) -
Amortization of Acquired Contract Liabilities (14,865 ) (8,965 ) (23,832 ) (20,115 )
Depreciation and Amortization   39,014     38,244     76,565     76,178  
 

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

$ 138,847   $ 122,250   $ 273,262   $ 290,380  
 
Net Sales $ 994,123   $ 967,345   $ 1,891,028   $ 1,911,028  
 
Adjusted EBITDA Margin   14.2 %   12.8 %   14.6 %   15.4 %
 
FINANCIAL DATA (UNAUDITED)
         
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
 
Non-GAAP Financial Measure Disclosures (continued)
 

 

Three Months Ended September 30, 2014

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

Segment Data

Aerospace

Aftermarket

Corporate /

Total

Aerostructures

Systems

Services

Eliminations

 
Net Income $ 67,446
 
Add-back:
Income Tax Expense 31,866
Interest Expense and Other   15,386  
 
Operating Income $ 114,698 $ 72,230 $ 46,214 $ 11,620 $ (15,366 )
 
Amortization of Acquired Contract Liabilities (14,865 ) (4,783 ) (10,082 ) - -
Depreciation and Amortization   39,014     24,765     11,147     1,926     1,176  
 

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

$ 138,847   $ 92,212   $ 47,279   $ 13,546   $ (14,190 )
 
Net Sales $ 994,123   $ 632,072   $ 288,902   $ 74,343   $ (1,194 )
 
Adjusted EBITDA Margin 14.2% 14.7% 17.0% 18.2% n/a
 
 

 

Six Months Ended September 30, 2014

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

Segment Data

Aerospace

Aftermarket

Corporate /

Total

Aerostructures

Systems

Services

Eliminations

 
Net Income $ 195,690
 
Add-back:
Income Tax Expense 101,786
Interest Expense and Other   57,746  
 
Operating Income (Loss) $ 355,222 $ 143,095 $ 83,567 $ 22,124 $ 106,436
 
Gain on Legal Settlement (134,693 ) - - - (134,693 )
Amortization of Acquired Contract Liabilities (23,832 ) (9,900 ) (13,932 ) - -
Depreciation and Amortization   76,565     49,744     20,665     3,803     2,353  
 

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

$ 273,262   $ 182,939   $ 90,300   $ 25,927   $ (25,904 )
 
Net Sales $ 1,891,028   $ 1,243,935   $ 508,754   $ 141,951   $ (3,612 )
 
Adjusted EBITDA Margin 14.6% 14.8% 18.2% 18.3% n/a
 
   
FINANCIAL DATA (UNAUDITED)
     
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
 
Non-GAAP Financial Measure Disclosures (continued)
 

 

Three Months Ended September 30, 2013

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

Segment Data

Aerospace

Aftermarket

Corporate /

Total

Aerostructures

Systems

Services

Eliminations

 
Net Income $ 49,516
 
Add-back:
Income Tax Expense 23,134
Interest Expense and Other   20,321  
 
Operating Income (Loss) $ 92,971 $ 64,425 $ 31,740 $ 10,102 $ (13,296 )
 
Amortization of Acquired Contract Liabilities (8,965 ) (5,614 ) (3,351 ) - -
Depreciation and Amortization   38,244     26,483     8,549     1,864     1,348  
 

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

$ 122,250   $ 85,294   $ 36,938   $ 11,966   $ (11,948 )
 
Net Sales $ 967,345   $ 690,748   $ 205,483   $ 72,971   $ (1,857 )
 
Adjusted EBITDA Margin 12.8% 12.4% 18.3% 16.4% n/a
 
 

 

Six Months Ended September 30, 2013

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

Segment Data

Aerospace

Aftermarket

Corporate /

Total

Aerostructures

Systems

Services

Eliminations

 
Net Income $ 128,559
 
Add-back:
Income Tax Expense 65,727
Interest Expense and Other   40,031  
 
Operating Income (Loss) $ 234,317 $ 164,812 $ 74,383 $ 21,381 $ (26,259 )
 
Amortization of Acquired Contract Liabilities (20,115 ) (11,755 ) (8,360 ) - -
Depreciation and Amortization   76,178     52,796     17,088     3,741     2,553  
 

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

$ 290,380   $ 205,853   $ 83,111   $ 25,122   $ (23,706 )
 
Net Sales $ 1,911,028   $ 1,342,636   $ 425,009   $ 147,324   $ (3,941 )
 
Adjusted EBITDA Margin 15.4% 15.5% 19.9% 17.1% 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

September 30, 2014

Pre-tax

 

After-tax

Diluted EPS

Location on

Financial Statements

Income from Continuing Operations- GAAP $ 99,312 $ 67,446 $ 1.32
Non-Recurring Costs:
Relocation Costs 196 126 0.00 Aerostructures (Primarily)
Jefferson Street Move:
Disruption 5,381 3,465 0.07 Aerostructures (EAC) **
Accelerated Depreciation   2,252       1,450     0.03   Aerostructures (EAC) **
 
Adjusted Income from Continuing Operations- non-GAAP $ 107,141     $ 72,487   $ 1.42   *
 
Six Months Ended

September 30, 2014

Pre-tax

After-tax

Diluted EPS

Location on

Financial Statements

Income from Continuing Operations- GAAP $ 297,476 $ 195,690 $ 3.79
Non-Recurring Costs:
Gain on Legal Settlement (134,693 ) (86,742 ) (1.68 ) Corporate
Refinancing Costs 22,615 14,564 0.28
Relocation Costs 3,193 2,056 0.04 Aerostructures (Primarily)
Jefferson Street Move:
Disruption 8,741 5,629 0.11 Aerostructures (EAC) **
Accelerated Depreciation   4,627       2,980     0.06   Aerostructures (EAC) **
 
Adjusted Income from Continuing Operations- non-GAAP $ 201,959     $ 134,177   $ 2.60  
 

   
* Difference due to rounding.

**

EAC- estimated costs at completion with respect to contracts within the scope of Accounting Standards Codification 605-35, "Revenue-Construction-Type and Production-Type Contracts"

 
     
FINANCIAL DATA (UNAUDITED)
 
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
 
Non-GAAP Financial Measure Disclosures (continued)
 
Three Months Ended

September 30, 2013

Pre-tax

After-tax

Diluted EPS

Location on

Financial Statements

Income from Continuing Operations- GAAP $ 72,650 $ 49,516 $ 0.94
Non-Recurring Costs:
Relocation Costs (including interest) 1,450 934 0.02 Aerostructures (Primarily)
Jefferson Street Move:
Disruption 2,191 1,411 0.03 Aerostructures (EAC) **
Accelerated Depreciation   2,138     1,377   0.03 Aerostructures (EAC) **
 
Adjusted Income from Continuing Operations- non-GAAP $ 78,429   $ 53,238 $ 1.01 *
 
Six Months Ended

September 30, 2013

Pre-tax

After-tax

Diluted EPS

Location on

Financial Statements

Income from Continuing Operations- GAAP $ 194,286 $ 128,559 $ 2.43
Non-Recurring Costs:
Relocation Costs (including interest) 2,771 1,785 0.03 Aerostructures (Primarily)
Jefferson Street Move:
Disruption 3,689 2,376 0.04 Aerostructures (EAC) **
Accelerated Depreciation   2,949     1,899   0.04 Aerostructures (EAC) **
 
Adjusted Income from Continuing Operations- non-GAAP $ 203,695   $ 134,619 $ 2.55 *
 
   
* Difference due to rounding.

**

EAC- estimated costs at completion with respect to contracts within the scope of Accounting Standards Codification 605-35, "Revenue Recognition-Construction-Type and Production-Type Contracts"

 
     
FINANCIAL DATA (UNAUDITED)
   
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
 
Non-GAAP Financial Measure Disclosures (continued)
 

Cash provided by operations, before pension contributions has been 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, stock repurchases 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, before pension contributions to cash provided by operations, as well as cash provided by operations to free cash flow available for debt reduction.

 
Six Months Ended
September 30,
2014   2013
 
Cash flow from operations, before pension contributions $ 313,767 $ 89,422
Pension contributions   55,352   45,800  
Cash provided by operations 258,415 43,622
Less:
Capital expenditures 59,074 119,265
Dividends   4,090   4,149  

Free cash flow available for debt reduction, acquisitions and share repurchases

$ 195,251 $ (79,792 )
 
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,
2014 2014
 

Calculation of Net Debt

Current portion $ 39,595 $ 49,575
Long-term debt   1,516,890     1,500,808  
Total debt 1,556,485 1,550,383
Less: Cash   33,366     28,998  
Net debt $ 1,523,119   $ 1,521,385  
 

Calculation of Capital

Net debt $ 1,523,119 $ 1,521,385
Stockholders' equity   2,353,681     2,283,911  
Total capital $ 3,876,800   $ 3,805,296  
 
Percent of net debt to capital 39.3 % 40.0 %

Source: Triumph Group, Inc.

Triumph Group, Inc.
Sheila G. Spagnolo
Vice President, Tax & Investor Relations
610-251-1000
sspagnolo@triumphgroup.com

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