Exhibit 99.1
NEWS RELEASE
Media Contact: Investor Relations Contact:
Michele Long Sheila Spagnolo
Phone (610) 251-1000 Phone (610) 251-1000
mmlong@triumphgroup.com sspagnolo@triumphgroup.com
TRIUMPH GROUP REPORTS SECOND QUARTER FISCAL 2018 RESULTS
Reaffirms Fiscal Year 2018 Guidance
BERWYN, Pa. - November 8, 2017 - Triumph Group, Inc. (NYSE: TGI) (“Triumph” or the “Company”) today reported financial results for its second quarter of fiscal year 2018, which ended September 30, 2017.
Second Quarter Fiscal 2018 Highlights
• | Net sales were $745.2 million. |
• | Operating income was $18.8 million. On an adjusted basis, operating income was $50.6 million, reflecting an adjusted operating margin of 7%. |
• | Net loss was ($5.4) million, or ($0.11) per share. On an adjusted basis, net income was $25.7 million, or $0.52 per diluted share. |
• | Cash used in operations was $200.0 million, and free cash use was $210.7 million. |
• | Management reaffirms net sales guidance of $3.1 to $3.2 billion and continues to expect organic sales growth in fiscal 2019. |
• | Management maintains guidance for adjusted earnings per diluted share of $2.25 to $2.75 and free cash use of $450 to $500 million. |
“Triumph Group’s second quarter results were consistent with our expectations,” stated Daniel J. Crowley, Triumph’s president and chief executive officer. “Aftermarket sales in Product Support grew both sequentially and year-over-year, and operating margins in Product Support and Integrated Systems remained strong. Profitability improved in Aerospace Structures, reflecting the progress we are making with our transformation initiatives. On an adjusted basis, Precision Components was profitable and remains a significant opportunity to contribute to the bottom line as we rationalize our facility footprint and further reduce costs.”
1
Mr. Crowley continued, “Our book-to-bill ratio was above one for the quarter and backlog increased both sequentially and year-over-year to $4.3 billion, led by a 7% quarterly growth in Integrated Systems’ backlog largely due to military programs. In addition, we were selected in September as a supplier of choice for the Boeing T-X trainer. Our favorable backlog trends demonstrate our progress towards our goal of driving organic growth on a sustained basis. We enhanced our financial strength with the refinancing of $500 million of debt and the sale of our Embee metal finishing company in September. These actions enable reinvestment in new areas of opportunity. Our achievements during the quarter are further evidence of the strategic and operational changes we are making to solidify the foundation for a stronger, more profitable company.”
Second Quarter Fiscal Year 2018 Overview
After accounting for divestitures, sales were down 12% organically, as anticipated, primarily due to the completion of and production rate reductions on previously disclosed programs along with the timing of deliveries on certain programs. These factors were partially offset by increased production on the 767/Tanker and Global Hawk/Triton programs.
Operating income of $18.8 million included $20.4 million loss on divestiture and $11.4 million of transformation related expenses. Net loss for the second quarter of fiscal year 2018 was ($5.4) million, or a loss of ($0.11) per share. Triumph’s results included the following:
($ millions except EPS) | Pre-tax | After-tax | Diluted EPS | |||||||||
Income (Loss) from Continuing Operations - GAAP | $ | (6.5 | ) | $ | (5.4 | ) | $ | (0.11 | ) | |||
Loss on divestiture | 20.4 | 20.4 | 0.41 | |||||||||
Refinancing costs | 2.0 | 1.6 | 0.03 | |||||||||
Transformation related costs: | ||||||||||||
Restructuring costs (non-cash) | 1.3 | 1.0 | 0.02 | |||||||||
Restructuring costs (cash) | 10.1 | 8.1 | 0.16 | |||||||||
Adjusted Income from Continuing Operations - non-GAAP | $ | 27.2 | $ | 25.7 | $ 0.52* | |||||||
*Difference due to rounding | ||||||||||||
The number of shares used in computing diluted earnings per share for the second quarter of fiscal year 2018 was 49.6 million.
For the quarter ended September 30, 2017, cash use from operations was $200.0 million, as anticipated, due to the liquidation of customer advances received in fiscal year 2017 along with spending on key development programs transitioning into production, transformation related costs and reduced vendor financing.
Outlook
Based on anticipated aircraft production rates and completed divestitures, the Company continues to expect that revenue for fiscal year 2018 will be approximately $3.1 to $3.2 billion,
2
and expects revenue to increase in fiscal year 2019 as development programs enter production and sales from new wins offset sunsetting programs. Additionally, the Company continues to expect fiscal year 2018 adjusted earnings per diluted share of $2.25 to $2.75, and free cash use of $450 to $500 million.
The Company’s current outlook adjusts for transformation related and refinancing costs, as well as any gains/losses on completed divestitures, but does not take into account the impact of any potential future divestitures.
Conference Call
Triumph Group will hold a conference call today, November 8th at 8:30 a.m. (ET) to discuss the second quarter fiscal year 2018 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 November 8th to November 15th by calling (855) 859-2056 (Domestic) or (404) 537-3406 (International), passcode #1599357.
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 or use, 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, 2017.
FINANCIAL DATA (UNAUDITED) ON FOLLOWING PAGES
3
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 | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Net sales | $ | 745,156 | $ | 874,769 | $ | 1,526,845 | $ | 1,768,022 | ||||||||
Operating income | 18,848 | 70,486 | 37,257 | 117,212 | ||||||||||||
Interest expense and other | 25,375 | 17,896 | 46,393 | 36,023 | ||||||||||||
Income tax (benefit) expense | (1,149 | ) | 17,783 | (1,827 | ) | 26,648 | ||||||||||
Net (loss) income | $ | (5,378 | ) | $ | 34,807 | $ | (7,309 | ) | $ | 54,541 | ||||||
Earnings per share - basic: | ||||||||||||||||
Net (loss) income | $ | (0.11 | ) | $ | 0.71 | $ | (0.15 | ) | $ | 1.11 | ||||||
Weighted average common shares outstanding - basic | 49,428 | 49,304 | 49,400 | 49,281 | ||||||||||||
Earnings per share - diluted: | ||||||||||||||||
Net (loss) income | $ | (0.11 | ) | $ | 0.70 | $ | (0.15 | ) | $ | 1.10 | ||||||
Weighted average common shares outstanding - diluted | 49,428 | 49,432 | 49,400 | 49,429 | ||||||||||||
Dividends declared and paid per common share | $ | 0.04 | $ | 0.04 | $ | 0.08 | $ | 0.08 | ||||||||
4
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except share data)
BALANCE SHEET | Unaudited | Audited | ||||||
September 30, | March 31, | |||||||
2017 | 2017 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 33,669 | $ | 69,633 | ||||
Accounts receivable, net | 330,134 | 311,792 | ||||||
Inventories, net of unliquidated progress payments of $429,185 and $222,485 | 1,368,715 | 1,340,175 | ||||||
Prepaid and other current assets | 28,850 | 30,064 | ||||||
Assets held for sale | — | 21,255 | ||||||
Current assets | 1,761,368 | 1,772,919 | ||||||
Property and equipment, net | 768,884 | 805,030 | ||||||
Goodwill | 1,124,864 | 1,142,605 | ||||||
Intangible assets, net | 533,630 | 592,364 | ||||||
Other, net | 93,200 | 101,682 | ||||||
Total assets | $ | 4,281,946 | $ | 4,414,600 | ||||
Liabilities & Stockholders' Equity | ||||||||
Current portion of long-term debt | $ | 22,883 | $ | 160,630 | ||||
Accounts payable | 388,221 | 481,243 | ||||||
Accrued expenses | 528,788 | 674,379 | ||||||
Liabilities related to assets held for sale | — | 18,008 | ||||||
Current liabilities | 939,892 | 1,334,260 | ||||||
Long-term debt, less current portion | 1,409,130 | 1,035,670 | ||||||
Accrued pension and post-retirement benefits, noncurrent | 549,211 | 592,134 | ||||||
Deferred income taxes, noncurrent | 70,325 | 68,107 | ||||||
Other noncurrent liabilities | 457,543 | 537,956 | ||||||
Stockholders' Equity: | ||||||||
Common stock, $.001 par value, 100,000,000 shares authorized, 52,460,920 and 52,460,920 shares issued; 49,632,547 and 49,573,029 shares outstanding | 51 | 51 | ||||||
Capital in excess of par value | 848,078 | 846,807 | ||||||
Treasury stock, at cost, 2,828,373 and 2,887,891 shares | (181,072 | ) | (183,696 | ) | ||||
Accumulated other comprehensive loss | (379,422 | ) | (396,178 | ) | ||||
Retained earnings | 568,210 | 579,489 | ||||||
Total stockholders' equity | 855,845 | 846,473 | ||||||
Total liabilities and stockholders' equity | $ | 4,281,946 | $ | 4,414,600 | ||||
5
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
SEGMENT DATA | Three Months Ended | Six Months Ended | ||||||||||||||
September 30, | September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net Sales: | ||||||||||||||||
Integrated Systems | $ | 233,765 | $ | 245,367 | $ | 471,900 | $ | 502,723 | ||||||||
Aerospace Structures | 249,284 | 320,283 | 525,260 | 651,879 | ||||||||||||
Precision Components | 229,156 | 259,458 | 466,026 | 514,060 | ||||||||||||
Product Support | 68,366 | 85,826 | 134,799 | 170,025 | ||||||||||||
Elimination of inter-segment sales | (35,415 | ) | (36,165 | ) | (71,140 | ) | (70,665 | ) | ||||||||
$ | 745,156 | $ | 874,769 | $ | 1,526,845 | $ | 1,768,022 | |||||||||
Operating Income (Loss): | ||||||||||||||||
Integrated Systems | $ | 42,087 | $ | 45,797 | $ | 89,504 | $ | 93,783 | ||||||||
Aerospace Structures | 11,513 | 24,867 | 11,231 | 34,031 | ||||||||||||
Precision Components | (1,611 | ) | 12,063 | (4,875 | ) | 4,281 | ||||||||||
Product Support | 11,233 | 14,265 | 19,670 | 28,324 | ||||||||||||
Corporate | (44,374 | ) | (26,506 | ) | (78,273 | ) | (43,207 | ) | ||||||||
$ | 18,848 | $ | 70,486 | $ | 37,257 | $ | 117,212 | |||||||||
Operating Margin % | ||||||||||||||||
Integrated Systems | 18.0 | % | 18.7 | % | 19.0 | % | 18.7 | % | ||||||||
Aerospace Structures | 4.6 | % | 7.8 | % | 2.1 | % | 5.2 | % | ||||||||
Precision Components | (0.7 | )% | 4.6 | % | (1.0 | )% | 0.8 | % | ||||||||
Product Support | 16.4 | % | 16.6 | % | 14.6 | % | 16.7 | % | ||||||||
Consolidated | 2.5 | % | 8.1 | % | 2.4 | % | 6.6 | % | ||||||||
Depreciation and Amortization: | ||||||||||||||||
Integrated Systems | $ | 9,588 | $ | 10,157 | $ | 19,539 | $ | 20,461 | ||||||||
Aerospace Structures | 19,046 | 18,385 | 38,437 | 36,347 | ||||||||||||
Precision Components | 10,259 | 14,016 | 18,008 | 28,345 | ||||||||||||
Product Support | 1,667 | 2,452 | 3,405 | 4,936 | ||||||||||||
Corporate | 308 | 276 | 610 | 659 | ||||||||||||
$ | 40,868 | $ | 45,286 | $ | 79,999 | $ | 90,748 | |||||||||
Amortization of Acquired Contract Liabilities: | ||||||||||||||||
Integrated Systems | $ | (9,299 | ) | $ | (9,136 | ) | $ | (16,602 | ) | $ | (19,473 | ) | ||||
Aerospace Structures | (17,670 | ) | (20,647 | ) | (38,963 | ) | (39,085 | ) | ||||||||
Precision Components | (929 | ) | (694 | ) | (1,806 | ) | (1,267 | ) | ||||||||
$ | (27,898 | ) | $ | (30,477 | ) | $ | (57,371 | ) | $ | (59,825 | ) | |||||
Capital Expenditures: | ||||||||||||||||
Integrated Systems | $ | 1,455 | $ | 2,595 | $ | 4,020 | $ | 5,823 | ||||||||
Aerospace Structures | 2,702 | 3,759 | 7,119 | 7,592 | ||||||||||||
Precision Components | 5,094 | 3,503 | 9,156 | 8,405 | ||||||||||||
Product Support | 769 | 703 | 1,030 | 1,333 | ||||||||||||
Corporate | 670 | 684 | 1,450 | 814 | ||||||||||||
$ | 10,690 | $ | 11,244 | $ | 22,775 | $ | 23,967 | |||||||||
6
(Continued)
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 20 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 gains or losses necessarily reflect the current and ongoing cash earnings related to our operations. |
7
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
• | 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 (including impairments) 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. |
• | 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.
8
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
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, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA): | ||||||||||||||||
Net (Loss) Income | $ | (5,378 | ) | $ | 34,807 | $ | (7,309 | ) | $ | 54,541 | ||||||
Add-back: | ||||||||||||||||
Income tax (benefit) expense | (1,149 | ) | 17,783 | (1,827 | ) | 26,648 | ||||||||||
Interest expense and other | 25,375 | 17,896 | 46,393 | 36,023 | ||||||||||||
Pension settlement charge | 523 | — | 523 | — | ||||||||||||
Loss on divestitures | 20,371 | 4,774 | 20,371 | 4,774 | ||||||||||||
Amortization of acquired contract liabilities | (27,898 | ) | (30,477 | ) | (57,371 | ) | (59,825 | ) | ||||||||
Depreciation and amortization | 40,868 | 45,286 | 79,999 | 90,748 | ||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 52,712 | $ | 90,069 | $ | 80,779 | $ | 152,909 | ||||||||
Net Sales # | $ | 745,156 | $ | 874,769 | $ | 1,526,845 | $ | 1,768,022 | ||||||||
Adjusted EBITDA Margin # | 7.3% | 10.7% | 5.5% | 9.0% | ||||||||||||
# Net Sales includes Amortization of Acquired Contract Liabilities. Since Adjusted EBITDA excludes Amortization of Acquired | ||||||||||||||||
Contract Liabilities, we've also excluded it from Net Sales in arriving at Adjusted EBITDA margin throughout this document. | ||||||||||||||||
9
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Three Months Ended September 30, 2017 | |||||||||||||||||||||||||
Segment Data | |||||||||||||||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | Total | Integrated Systems | Aerospace Structures | Precision Components | Product Support | Corporate/Eliminations | |||||||||||||||||||
Net Loss | $ | (5,378 | ) | ||||||||||||||||||||||
Add-back: | |||||||||||||||||||||||||
Income tax benefit | (1,149 | ) | |||||||||||||||||||||||
Interest expense and other | 25,375 | ||||||||||||||||||||||||
Operating Income (Loss) | $ | 18,848 | $ | 42,087 | $ | 11,513 | $ | (1,611 | ) | $ | 11,233 | $ | (44,374 | ) | |||||||||||
Loss on divestiture | 20,371 | — | — | — | — | 20,371 | |||||||||||||||||||
Pension settlement charge | 523 | — | — | — | — | 523 | |||||||||||||||||||
Amortization of acquired contract liabilities | (27,898 | ) | (9,299 | ) | (17,670 | ) | (929 | ) | — | — | |||||||||||||||
Depreciation and amortization | 40,868 | 9,588 | 19,046 | 10,259 | 1,667 | 308 | |||||||||||||||||||
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 52,712 | $ | 42,376 | $ | 12,889 | $ | 7,719 | $ | 12,900 | $ | (23,172 | ) | ||||||||||||
Net Sales | $ | 745,156 | $ | 233,765 | $ | 249,284 | $ | 229,156 | $ | 68,366 | $ | (35,415 | ) | ||||||||||||
Adjusted EBITDA Margin | 7.3% | 18.9% | 5.6% | 3.4% | 18.9% | n/a | |||||||||||||||||||
10
Six Months Ended September 30, 2017 | |||||||||||||||||||||||||
Segment Data | |||||||||||||||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | Total | Integrated Systems | Aerospace Structures | Precision Components | Product Support | Corporate/Eliminations | |||||||||||||||||||
Net Loss | $ | (7,309 | ) | ||||||||||||||||||||||
Add-back: | |||||||||||||||||||||||||
Income tax benefit | (1,827 | ) | |||||||||||||||||||||||
Interest expense and other | 46,393 | ||||||||||||||||||||||||
Operating Income (Loss) | $ | 37,257 | $ | 89,504 | $ | 11,231 | $ | (4,875 | ) | $ | 19,670 | $ | (78,273 | ) | |||||||||||
Loss on divestiture | 20,371 | — | — | — | — | 20,371 | |||||||||||||||||||
Pension settlement charge | 523 | — | — | — | — | 523 | |||||||||||||||||||
Amortization of acquired contract liabilities | (57,371 | ) | (16,602 | ) | (38,963 | ) | (1,806 | ) | — | — | |||||||||||||||
Depreciation and amortization | 79,999 | 19,539 | 38,437 | 18,008 | 3,405 | 610 | |||||||||||||||||||
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 80,779 | $ | 92,441 | $ | 10,705 | $ | 11,327 | $ | 23,075 | $ | (56,769 | ) | ||||||||||||
Net Sales | $ | 1,526,845 | $ | 471,900 | $ | 525,260 | $ | 466,026 | $ | 134,799 | $ | (71,140 | ) | ||||||||||||
Adjusted EBITDA Margin | 5.5% | 20.3% | 2.2% | 2.4% | 17.1% | n/a | |||||||||||||||||||
11
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Three Months Ended September 30, 2016 | |||||||||||||||||||||||||
Segment Data | |||||||||||||||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | Total | Integrated Systems | Aerospace Structures | Precision Components | Product Support | Corporate / Eliminations | |||||||||||||||||||
Net Income | $ | 34,807 | |||||||||||||||||||||||
Add-back: | |||||||||||||||||||||||||
Income tax expense | 17,783 | ||||||||||||||||||||||||
Interest expense and other | 17,896 | ||||||||||||||||||||||||
Operating Income (Loss) | $ | 70,486 | 45,797 | $ | 24,867 | $ | 12,063 | $ | 14,265 | (26,506 | ) | ||||||||||||||
Loss on divestiture | 4,774 | — | — | — | — | 4,774 | |||||||||||||||||||
Amortization of acquired contract liabilities | (30,477 | ) | (9,136 | ) | (20,647 | ) | (694 | ) | — | — | |||||||||||||||
Depreciation and amortization | 45,286 | 10,157 | 18,385 | 14,016 | 2,452 | 276 | |||||||||||||||||||
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 90,069 | $ | 46,818 | $ | 22,605 | $ | 25,385 | $ | 16,717 | $ | (21,456 | ) | ||||||||||||
Net Sales | $ | 874,769 | $ | 245,367 | $ | 320,283 | $ | 259,458 | $ | 85,826 | $ | (36,165 | ) | ||||||||||||
Adjusted EBITDA Margin | 10.7% | 19.8% | 7.5% | 9.8% | 19.5% | n/a | |||||||||||||||||||
12
Six Months Ended September 30, 2016 | |||||||||||||||||||||||||
Segment Data | |||||||||||||||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | Total | Integrated Systems | Aerospace Structures | Precision Components | Product Support | Corporate / Eliminations | |||||||||||||||||||
Net Income | $ | 54,541 | |||||||||||||||||||||||
Add-back: | |||||||||||||||||||||||||
Income tax expense | 26,648 | ||||||||||||||||||||||||
Interest expense and other | 36,023 | ||||||||||||||||||||||||
Operating Income (Loss) | $ | 117,212 | $ | 93,783 | $ | 34,031 | $ | 4,281 | $ | 28,324 | (43,207 | ) | |||||||||||||
Loss on divestiture | 4,774 | — | — | — | — | 4,774 | |||||||||||||||||||
Amortization of acquired contract liabilities | (59,825 | ) | (19,473 | ) | (39,085 | ) | (1,267 | ) | — | — | |||||||||||||||
Depreciation and amortization | 90,748 | 20,461 | 36,347 | 28,345 | 4,936 | 659 | |||||||||||||||||||
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 152,909 | $ | 94,771 | $ | 31,293 | $ | 31,359 | $ | 33,260 | $ | (37,774 | ) | ||||||||||||
Net Sales | $ | 1,768,022 | $ | 502,723 | $ | 651,879 | $ | 514,060 | $ | 170,025 | $ | (70,665 | ) | ||||||||||||
Adjusted EBITDA Margin | 9.0% | 19.6% | 5.1% | 6.1% | 19.6% | n/a | |||||||||||||||||||
13
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except per share data)
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 per diluted 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 tables reconcile 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, 2017 | |||||||||||||
Pre-Tax | After-Tax | Diluted EPS | |||||||||||
Loss from Continuing Operations - GAAP | $ | (6,527 | ) | $ | (5,378 | ) | $ | (0.11 | ) | ||||
Adjustments: | |||||||||||||
Loss on divestiture | 20,371 | 20,371 | 0.41 | ||||||||||
Refinancing costs | 1,986 | 1,589 | 0.03 | ||||||||||
Restructuring cost (non-cash) | 1,295 | 1,036 | 0.02 | ||||||||||
Restructuring costs (cash) | 10,101 | 8,081 | 0.16 | ||||||||||
Adjusted Income from Continuing Operations - non-GAAP | $ | 27,226 | $ | 25,699 | $ | 0.52 | * | ||||||
* - Difference due to rounding | |||||||||||||
Six Months Ended | |||||||||||||
September 30, 2017 | |||||||||||||
Pre-Tax | After-Tax | Diluted EPS | |||||||||||
Loss from Continuing Operations - GAAP | $ | (9,136 | ) | $ | (7,309 | ) | $ | (0.15 | ) | ||||
Adjustments: | |||||||||||||
Loss on divestiture | 20,371 | 20,371 | 0.41 | ||||||||||
Refinancing costs | 1,986 | 1,589 | 0.03 | ||||||||||
Restructuring cost (non-cash) | 2,156 | 1,725 | 0.03 | ||||||||||
Restructuring costs (cash) | 27,602 | 22,082 | 0.45 | ||||||||||
Adjusted Income from Continuing Operations - non-GAAP | $ | 42,979 | $ | 38,458 | $ | 0.78 | * | ||||||
* - Difference due to rounding | |||||||||||||
14
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except per share data)
Non-GAAP Financial Measure Disclosures (continued)
Three Months Ended | |||||||||||||
September 30, 2016 | |||||||||||||
Pre-Tax | After-Tax | Diluted EPS | |||||||||||
Income from Continuing Operations - GAAP | $ | 52,590 | $ | 34,807 | $ | 0.70 | |||||||
Adjustments: | |||||||||||||
Loss on divestiture | 4,774 | 4,774 | 0.10 | ||||||||||
Restructuring costs (non-cash) | 3,740 | 2,581 | 0.05 | ||||||||||
Restructuring costs (cash) | 10,462 | 7,219 | 0.15 | ||||||||||
Adjusted Income from Continuing Operations - non-GAAP | $ | 71,566 | $ | 49,381 | $ | 1.00 | |||||||
* Difference due to rounding. | |||||||||||||
Six Months Ended | |||||||||||||
September 30, 2016 | |||||||||||||
Pre-Tax | After-Tax | Diluted EPS | |||||||||||
Income from Continuing Operations - GAAP | $ | 81,189 | $ | 54,541 | $ | 1.10 | |||||||
Adjustments: | |||||||||||||
Triumph Precision Components - Strike related costs | 15,701 | 10,834 | 0.22 | ||||||||||
Triumph Precision Components - Inventory write-down | 6,089 | 4,201 | 0.08 | ||||||||||
Triumph Aerospace Structures - UAS program | 14,200 | 9,798 | 0.20 | ||||||||||
Loss on divestiture | 4,774 | 4,774 | 0.10 | ||||||||||
Restructuring costs (non-cash) | 7,231 | 4,989 | 0.10 | ||||||||||
Restructuring costs (cash) | 17,113 | 11,808 | 0.24 | ||||||||||
Adjusted Income from Continuing Operations - non-GAAP | $ | 146,297 | $ | 100,945 | $ | 2.04 | |||||||
* Difference due to rounding. | |||||||||||||
15
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
The following table reconciles our Operating income to Adjusted Operating income as noted above.
Three Months Ended | Three Months Ended | |||||||
September 30, 2017 | September 30, 2016 | |||||||
Operating Income - GAAP | $ | 18,848 | 70,486 | |||||
Adjustments: | ||||||||
Loss on divestiture | 20,371 | 4,774 | ||||||
Restructuring costs (non-cash) | 1,295 | 3,740 | ||||||
Restructuring costs (cash) | 10,101 | 10,462 | ||||||
Adjusted Operating Income - non-GAAP | $ | 50,615 | $ | 89,462 | ||||
16
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Cash provided by operations 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 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 | Six Months Ended | ||||||||||
June 30, | September 30, | September 30, | |||||||||
2017 | 2017 | 2017 | |||||||||
Cash flow from operations | $ | (99,048 | ) | $ | (200,017 | ) | $ | (299,065 | ) | ||
Less: | |||||||||||
Capital expenditures | (12,085 | ) | (10,690 | ) | (22,775 | ) | |||||
Free cash flow available for debt reduction, acquisitions and share repurchases | $ | (111,133 | ) | $ | (210,707 | ) | $ | (321,840 | ) | ||
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, | |||||||
2017 | 2017 | |||||||
Calculation of Net Debt | ||||||||
Current portion | $ | 22,883 | $ | 160,630 | ||||
Long-term debt | 1,409,130 | 1,035,670 | ||||||
Total debt | 1,432,013 | 1,196,300 | ||||||
Plus: Deferred debt issuance costs | 18,638 | 11,752 | ||||||
Less: Cash | (33,669 | ) | (69,633 | ) | ||||
Net debt | $ | 1,416,982 | $ | 1,138,419 | ||||
Calculation of Capital | ||||||||
Net debt | $ | 1,416,982 | $ | 1,138,419 | ||||
Stockholders' equity | 855,845 | 846,473 | ||||||
Total capital | $ | 2,272,827 | $ | 1,984,892 | ||||
Percent of net debt to capital | 62.3 | % | 57.4 | % | ||||
17
