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 FOURTH QUARTER FISCAL 2018 RESULTS
Introduces Fiscal Year 2019 Guidance Reflecting Year-Over-Year Sales Growth
BERWYN, Pa. - May 10, 2018 - Triumph Group, Inc. (NYSE: TGI) (“Triumph” or the “Company”) today reported financial results for its fourth quarter of fiscal year 2018, which ended March 31, 2018.
Full Fiscal and Fourth Quarter 2018 Highlights
• | For the full fiscal year 2018, sales were $3.2 billion, loss per share was ($8.48), or earnings per diluted share of $2.53 on an adjusted basis, cash used in operations was ($288.9) million and free cash use was ($330.9) million. |
• | Net sales were $896.9 million for fourth quarter fiscal year 2018. |
• | Operating loss for fourth quarter fiscal year 2018 was ($280.0) million, reflecting an operating margin of (31.2%), and included a previously disclosed $345.0 million non-cash charge for the impairment of goodwill in Aerospace Structures. On an adjusted basis, operating income was $71.1 million with an adjusted operating margin of 7.9%. |
• | Net loss for the fourth quarter fiscal year 2018 was ($298.8) million, or ($6.04) per share, and included a $6.91 per share charge related to the aforementioned impairment charge. On an adjusted basis, net income was $50.1 million, or $1.01 per diluted share. |
• | Cash used in operations for fourth quarter fiscal year 2018 was ($90.6) million, and free cash use was ($100.7) million. |
• | Management provides guidance for fiscal 2019 for net sales of $3.3 to $3.4 billion and earnings per diluted share of $0.00 to $0.50, or $1.50 to $2.10 on an adjusted basis. |
“Triumph Group’s fourth quarter results reflect strategic and operational accomplishments as we continue on our path to predictable profitability. We ended the year within our guidance on all measures while net sales increased on a sequential basis, with all three of our segments delivering top line growth.” stated Daniel J. Crowley, Triumph’s president and chief executive officer. “Product Support generated year-over-year margin improvement while Integrated Systems produced both year-over-year and sequential improvement in margin.”
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Mr. Crowley continued, “During the quarter, we continued to strengthen our relationships with our customers as we work towards mutually beneficial arrangements as well as program optimization. Our business development results continue to accelerate with new awards yielding a book-to-bill ratio of greater than one for the fifth consecutive quarter and increasing our backlog to $4.49 billion, up 3% sequentially and 13% year-over-year. As part of the ongoing optimization of our portfolio, we completed the divestiture of another non-core business during the fiscal fourth quarter, which we expect to contribute incrementally to our cash flow in fiscal 2019.”
Mr. Crowley concluded, “We are well positioned in FY19 to return to top-line growth as development programs enter production and we expect our cost reduction progress to lead to more consistent profitability. As demonstrated between fiscal 2017 and fiscal 2018, we expect cash flow to improve year over year in fiscal 2019. We are refining our outlook for fiscal 2019 cash guidance to account for potential contract settlements under discussion now, divestitures and working capital needs. We will provide our cash flow outlook, in addition to updates on our progress towards our other guidance targets, in future quarters.”
Fourth Quarter Fiscal Year 2018 Overview
After accounting for divestitures, sales for the fourth quarter of fiscal 2018 were up organically from the comparable prior year period, reflecting higher production deliveries on the Global Hawk/Triton, Global 7000, and G650 programs partially offset by the completion of and production rate reductions on previously disclosed programs.
Fourth quarter operating loss of ($280.0) million included a previously disclosed $345.0 million non-cash goodwill impairment charge for Aerospace Structures as well as the other adjustments shown below. Net loss for the fourth quarter of fiscal year 2018 was ($298.8) million, or ($6.04) per share, or $1.01 earnings per diluted share on an adjusted basis. Triumph’s results included the following:
($ millions except EPS) | Pre-tax | After-tax | Diluted EPS | ||||
Loss from Continuing Operations - GAAP | $(307.2) | $(298.8) | $(6.04) | ||||
Goodwill impairment | 345.0 | 342.0 | 6.91 | ||||
Loss on divestitures | 10.4 | 10.4 | 0.21 | ||||
Curtailment & settlement, net | (11.1) | (8.7) | (0.17) | ||||
Transformation related costs: | |||||||
Restructuring costs (non-cash) | 0.5 | 0.4 | 0.01 | ||||
Restructuring costs (cash) | 6.3 | 4.9 | 0.10 | ||||
Adjusted Income from Continuing Operations - non-GAAP | 43.8 | 50.1 | 1.01 | * | |||
* Difference due to rounding | |||||||
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Net loss for fiscal year 2018 was ($419.4) million or a loss of ($8.48) per share, or $2.53 earnings per diluted share on an adjusted basis, and included the following:
($ millions except EPS) | Pre-tax | After-tax | Diluted EPS | ||||
Loss from Continuing Operations - GAAP | $(461.8) | $(419.4) | $(8.48) | ||||
Goodwill impairment | 535.2 | 513.3 | 10.38 | ||||
Loss on divestitures | 30.7 | 30.7 | 0.62 | ||||
Curtailment & settlements, net | (25.7) | (25.5) | (0.51) | ||||
Refinancing costs | 2.0 | 2.0 | 0.04 | ||||
Transformation related costs: | |||||||
Restructuring costs (non-cash) | 3.0 | 3.0 | 0.06 | ||||
Restructuring costs (cash) | 40.1 | 39.7 | 0.8 | ||||
Estimated impact of tax reform | — | (22.4) | (0.45) | ||||
Adjusted Income from Continuing Operations - non-GAAP | $123.5 | $121.5 | $2.45 | * | |||
* Difference due to rounding | |||||||
The number of shares used in computing diluted earnings per share for the fourth quarter of fiscal year 2018 was 49.8 million and 49.7 million for the full fiscal year 2018.
For the quarter ended March 31, 2018, cash flow used in operations was ($90.6) million, reflecting approximately ($55.0) million for the net liquidation of customer advances, along with spending on key development programs transitioning into production and transformation related costs.
Outlook
Based on anticipated aircraft production rates and completed divestitures, the Company expects that revenue for fiscal year 2019 will be approximately $3.3 to $3.4 billion, up from fiscal 2018 as development programs enter production and sales from continuing programs and new wins offset sunsetting programs. Additionally, the Company expects fiscal year 2019 earnings per diluted share to be $0.00 to $0.50, or $1.50 to $2.10 adjusted for pension accounting changes and transformation related costs.
The Company’s current outlook reflects adjustments detailed in the attached tables but does not take into account the impact of any potential future divestitures. In addition, the Company’s outlook is inclusive of the projected impact of the adoption of ASC 606, Revenue from Contracts with Customers and ASU 2017-07 (Pension).
Conference Call
Triumph Group will hold a conference call today, May 10th at 8:30 a.m. (ET) to discuss the fourth 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 May 10th to May 17th by calling (855) 859-2056 (Domestic) or (404) 537-3406 (International), passcode #4373459.
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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
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(in thousands, except per share data)
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Three Months Ended | Twelve Months Ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
CONDENSED STATEMENTS OF INCOME | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net sales | $ | 896,860 | $ | 919,914 | $ | 3,198,951 | $ | 3,532,799 | ||||||||
Operating (loss) income | (279,959 | ) | (115,490 | ) | (362,406 | ) | 56,889 | |||||||||
Interest expense and other | 27,213 | 24,780 | 99,442 | 80,501 | ||||||||||||
Income tax (benefit) expense | (8,376 | ) | (13,445 | ) | (42,492 | ) | 19,340 | |||||||||
Net loss | $ | (298,796 | ) | $ | (126,825 | ) | $ | (419,356 | ) | $ | (42,952 | ) | ||||
Earnings per share - basic: | ||||||||||||||||
Net loss | $ | (6.04 | ) | $ | (2.57 | ) | $ | (8.48 | ) | $ | (0.87 | ) | ||||
Weighted average common shares outstanding - basic | 49,488 | 49,350 | 49,442 | 49,303 | ||||||||||||
Earnings per share - diluted: | ||||||||||||||||
Net loss | $ | (6.04 | ) | $ | (2.57 | ) | $ | (8.48 | ) | $ | (0.87 | ) | ||||
Weighted average common shares outstanding - diluted | 49,488 | 49,350 | 49,442 | 49,303 | ||||||||||||
Dividends declared and paid per common share | $ | 0.04 | $ | 0.04 | $ | 0.16 | $ | 0.16 | ||||||||
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FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except per share data)
BALANCE SHEET | Unaudited | Audited | ||||||
March 31, | March 31, | |||||||
2018 | 2017 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 35,819 | $ | 69,633 | ||||
Accounts receivable, net | 414,185 | 311,792 | ||||||
Inventories, net of unliquidated progress payments of $387,146 and $222,485 | 1,425,295 | 1,340,175 | ||||||
Prepaid and other current assets | 44,428 | 30,064 | ||||||
Assets held for sale | 1,324 | 21,255 | ||||||
Current assets | 1,921,051 | 1,772,919 | ||||||
Property and equipment, net | 726,003 | 805,030 | ||||||
Goodwill | 592,828 | 1,142,605 | ||||||
Intangible assets, net | 507,681 | 592,364 | ||||||
Other, net | 57,627 | 101,682 | ||||||
Total assets | $ | 3,805,190 | $ | 4,414,600 | ||||
Liabilities & Stockholders' Equity | ||||||||
Current portion of long-term debt | $ | 16,527 | $ | 160,630 | ||||
Accounts payable | 418,367 | 481,243 | ||||||
Accrued expenses | 555,231 | 674,379 | ||||||
Liabilities related to assets held for sale | 440 | 18,008 | ||||||
Current liabilities | 990,565 | 1,334,260 | ||||||
Long-term debt, less current portion | 1,421,757 | 1,035,670 | ||||||
Accrued pension and post-retirement benefits, noncurrent | 483,887 | 592,134 | ||||||
Deferred income taxes, noncurrent | 10,548 | 68,107 | ||||||
Other noncurrent liabilities | 441,864 | 537,956 | ||||||
Stockholders' Equity: | ||||||||
Common stock, $.001 par value, 100,000,000 shares authorized, 52,460,920 and 52,460,920 shares issued; 49,669,848 and 49,573,029 shares outstanding | 51 | 51 | ||||||
Capital in excess of par value | 851,280 | 846,807 | ||||||
Treasury stock, at cost, 2,791,072 and 2,887,891 shares | (179,082 | ) | (183,696 | ) | ||||
Accumulated other comprehensive income | (367,870 | ) | (396,178 | ) | ||||
Retained earnings | 152,190 | 579,489 | ||||||
Total stockholders' equity | 456,569 | 846,473 | ||||||
Total liabilities and stockholders' equity | $ | 3,805,190 | $ | 4,414,600 | ||||
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FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
SEGMENT DATA | Three Months Ended | Twelve Months Ended | |||||||||||||||
March 31, | March 31, | ||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||
Net Sales: | |||||||||||||||||
Integrated Systems | $ | 275,253 | $ | 282,001 | $ | 986,351 | $ | 1,040,805 | |||||||||
Aerospace Structures | 550,371 | 560,696 | 1,954,729 | 2,172,768 | |||||||||||||
Product Support | 79,074 | 81,008 | 281,913 | 338,325 | |||||||||||||
Elimination of inter-segment sales | (7,838 | ) | (3,791 | ) | (24,042 | ) | (19,099 | ) | |||||||||
$ | 896,860 | $ | 919,914 | $ | 3,198,951 | $ | 3,532,799 | ||||||||||
Operating (Loss) Income: | |||||||||||||||||
Integrated Systems | $ | 55,034 | $ | 55,915 | $ | 187,205 | $ | 201,294 | |||||||||
Aerospace Structures | (324,610 | ) | (155,610 | ) | (492,457 | ) | (90,489 | ) | |||||||||
Product Support | 13,633 | 12,814 | 45,702 | 55,801 | |||||||||||||
Corporate | (24,016 | ) | (28,609 | ) | (102,856 | ) | (109,717 | ) | |||||||||
$ | (279,959 | ) | $ | (115,490 | ) | $ | (362,406 | ) | $ | 56,889 | |||||||
Depreciation and Amortization: | |||||||||||||||||
Integrated Systems | $ | 8,128 | $ | 10,104 | * | $ | 35,986 | $ | 40,332 | * | |||||||
Aerospace Structures | 373,444 | * | 295,781 | * | 649,013 | * | 392,414 | * | |||||||||
Product Support | 1,675 | 1,807 | 6,744 | 9,037 | |||||||||||||
Corporate | 801 | 472 | 1,852 | 1,461 | |||||||||||||
$ | 384,048 | $ | 308,164 | $ | 693,595 | $ | 443,244 | ||||||||||
Amortization of Acquired Contract Liabilities: | |||||||||||||||||
Integrated Systems | $ | (10,058 | ) | $ | (9,659 | ) | $ | (38,293 | ) | $ | (36,760 | ) | |||||
Aerospace Structures | (23,228 | ) | (22,314 | ) | (86,855 | ) | (84,244 | ) | |||||||||
$ | (33,286 | ) | $ | (31,973 | ) | $ | (125,148 | ) | $ | (121,004 | ) | ||||||
Capital Expenditures: | |||||||||||||||||
Integrated Systems | $ | 223 | $ | 7,901 | $ | 6,146 | $ | 16,487 | |||||||||
Aerospace Structures | 7,453 | 9,574 | 29,519 | 30,434 | |||||||||||||
Product Support | 577 | 610 | 2,206 | 2,630 | |||||||||||||
Corporate | 1,865 | 624 | 4,179 | 2,281 | |||||||||||||
$ | 10,118 | $ | 18,709 | $ | 42,050 | $ | 51,832 | ||||||||||
* - Includes Impairment Charges | |||||||||||||||||
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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:
• | 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. |
• | 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. |
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FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
• | 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.
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The following table shows our Adjusted EBITDA reconciled to our net income for the indicated periods (in thousands):
Three Months Ended | Twelve Months Ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA): | ||||||||||||||||
Net Loss | $ | (298,796 | ) | $ | (126,825 | ) | $ | (419,356 | ) | $ | (42,952 | ) | ||||
Add-back: | ||||||||||||||||
Income tax (benefit) expense | (8,376 | ) | (13,445 | ) | (42,492 | ) | 19,340 | |||||||||
Interest expense and other | 27,213 | 24,780 | 99,442 | 80,501 | ||||||||||||
Curtailment Gain | (11,146 | ) | — | (25,722 | ) | — | ||||||||||
Loss on divestitures | 10,370 | — | 30,741 | 19,124 | ||||||||||||
Amortization of acquired contract liabilities | (33,286 | ) | (31,973 | ) | (125,148 | ) | (121,004 | ) | ||||||||
Depreciation and amortization | 384,048 | 308,164 | 693,595 | 443,244 | ||||||||||||
Adjusted Earnings (Loss) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 70,027 | $ | 160,701 | $ | 211,060 | $ | 398,253 | ||||||||
Net sales # | 896,860 | 919,914 | 3,198,951 | 3,532,799 | ||||||||||||
Net Loss Margin | (33.3)% | (13.8)% | (13.1)% | (1.2)% | ||||||||||||
Adjusted EBITDA Margin | 8.1% | 18.1% | 6.9% | 11.7% | ||||||||||||
# Net sales includes amortization of acquired contract liabilities. Since Adjusted EBTIDA excludes amortization of acquired contract liabilities, we've also excluded it from net sales in arriving at Adjusted EBITDA margin throughout this document. | ||||||||||||||||
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FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Three Months Ended March 31, 2018 | |||||||||||||||||||||
Segment Data | |||||||||||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | Total | Integrated Systems | Aerospace Structures | Product Support | Corporate/Eliminations | ||||||||||||||||
Net Loss | $ | (298,796 | ) | ||||||||||||||||||
Add-back: | |||||||||||||||||||||
Income tax benefit | (8,376 | ) | |||||||||||||||||||
Interest expense and other | 27,213 | ||||||||||||||||||||
Operating (Loss) Income | $ | (279,959 | ) | $ | 55,034 | $ | (324,610 | ) | $ | 13,633 | $ | (24,016 | ) | ||||||||
Loss on divestitures | 10,370 | — | — | — | 10,370 | ||||||||||||||||
Curtailment & settlement gain, net | (11,146 | ) | — | — | — | (11,146 | ) | ||||||||||||||
Amortization of acquired contract liabilities | (33,286 | ) | (10,058 | ) | (23,228 | ) | — | — | |||||||||||||
Depreciation and amortization | 384,048 | 8,128 | 373,444 | 1,675 | 801 | ||||||||||||||||
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 70,027 | $ | 53,104 | $ | 25,606 | $ | 15,308 | $ | (23,991 | ) | ||||||||||
Net sales | $ | 896,860 | $ | 275,253 | $ | 550,371 | $ | 79,074 | $ | (7,838 | ) | ||||||||||
Adjusted EBITDA Margin | 8.1% | 20.0% | 4.9% | 19.4% | n/a | ||||||||||||||||
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FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Twelve Months Ended March 31, 2018 | |||||||||||||||||||||
Segment Data | |||||||||||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | Total | Integrated Systems | Aerospace Structures | Product Support | Corporate/Eliminations | ||||||||||||||||
Net Loss | $ | (419,356 | ) | ||||||||||||||||||
Add-back: | |||||||||||||||||||||
Income tax benefit | (42,492 | ) | |||||||||||||||||||
Interest expense and other | 99,442 | ||||||||||||||||||||
Operating (Loss) Income | $ | (362,406 | ) | $ | 187,205 | $ | (492,457 | ) | $ | 45,702 | $ | (102,856 | ) | ||||||||
Loss on divestitures | 30,741 | — | — | — | 30,741 | ||||||||||||||||
Curtailment & settlement gain, net | (25,722 | ) | — | — | — | (25,722 | ) | ||||||||||||||
Amortization of acquired contract liabilities | (125,148 | ) | (38,293 | ) | (86,855 | ) | — | — | |||||||||||||
Depreciation and amortization | 693,595 | 35,986 | 649,013 | 6,744 | 1,852 | ||||||||||||||||
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 211,060 | $ | 184,898 | $ | 69,701 | $ | 52,446 | $ | (95,985 | ) | ||||||||||
Net sales | $ | 3,198,951 | $ | 986,351 | $ | 1,954,729 | $ | 281,913 | $ | (24,042 | ) | ||||||||||
Adjusted EBITDA Margin | 6.9% | 19.5% | 3.7% | 18.6% | n/a | ||||||||||||||||
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FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Three Months Ended March 31, 2017 | |||||||||||||||||||||
Segment Data | |||||||||||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | Total | Integrated Systems | Aerospace Structures | Product Support | Corporate/Eliminations | ||||||||||||||||
Net Loss | $ | (126,825 | ) | ||||||||||||||||||
Add-back: | |||||||||||||||||||||
Income tax benefit | (13,445 | ) | |||||||||||||||||||
Interest expense and other | 24,780 | ||||||||||||||||||||
Operating (Loss) Income | $ | (115,490 | ) | $ | 55,915 | $ | (155,610 | ) | $ | 12,814 | $ | (28,609 | ) | ||||||||
Amortization of acquired contract liabilities | (31,973 | ) | (9,659 | ) | (22,314 | ) | — | — | |||||||||||||
Depreciation and amortization | 308,164 | 10,104 | 295,781 | 1,807 | 472 | ||||||||||||||||
Adjusted Earnings (Losses). before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 160,701 | $ | 56,360 | $ | 117,857 | $ | 14,621 | $ | (28,137 | ) | ||||||||||
Net sales | $ | 919,914 | $ | 282,001 | $ | 560,696 | $ | 81,008 | $ | (3,791 | ) | ||||||||||
Adjusted EBITDA Margin | 18.1% | 20.7% | 21.9% | 18.0% | n/a | ||||||||||||||||
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(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Twelve Months Ended March 31, 2017 | |||||||||||||||||||||
Segment Data | |||||||||||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | Total | Integrated Systems | Aerospace Structures | Product Support | Corporate/Eliminations | ||||||||||||||||
Net Loss | $ | (42,952 | ) | ||||||||||||||||||
Add-back: | |||||||||||||||||||||
Income tax expense | 19,340 | ||||||||||||||||||||
Interest expense and other | 80,501 | ||||||||||||||||||||
Operating Income (Loss) | $ | 56,889 | $ | 201,294 | $ | (90,489 | ) | $ | 55,801 | $ | (109,717 | ) | |||||||||
Loss on divestiture | 19,124 | — | — | — | 19,124 | ||||||||||||||||
Amortization of acquired contract liabilities | (121,004 | ) | (36,760 | ) | (84,244 | ) | — | — | |||||||||||||
Depreciation and amortization | 443,244 | 40,332 | 392,414 | 9,037 | 1,461 | ||||||||||||||||
Adjusted (Losses) Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 398,253 | $ | 204,866 | $ | 217,681 | $ | 64,838 | $ | (89,132 | ) | ||||||||||
Net sales | $ | 3,532,799 | $ | 1,040,805 | $ | 2,172,768 | $ | 338,325 | $ | (19,099 | ) | ||||||||||
Adjusted EBITDA Margin | 11.7% | 20.4% | 10.4% | 19.2% | n/a | ||||||||||||||||
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(Continued)
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 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 | |||||||||||||
March 31, 2018 | |||||||||||||
Pre-Tax | After-Tax | Diluted EPS | |||||||||||
Loss from Continuing Operations - GAAP | $ | (307,172 | ) | $ | (298,796 | ) | $ | (6.04 | ) | ||||
Adjustments: | |||||||||||||
Goodwill Impairment | 345,000 | 341,970 | 6.91 | ||||||||||
Loss on divestitures | 10,370 | 10,370 | 0.21 | ||||||||||
Curtailment & settlement, net | (11,146 | ) | (8,694 | ) | (0.17 | ) | |||||||
Restructuring costs (non-cash) | 467 | 364 | 0.01 | ||||||||||
Restructuring costs (cash) | 6,319 | 4,929 | 0.10 | ||||||||||
Adjusted Income from continuing operations - non-GAAP | $ | 43,838 | $ | 50,143 | $ | 1.01 | * | ||||||
* Difference due to rounding | |||||||||||||
Twelve Months Ended | |||||||||||||
March 31, 2018 | |||||||||||||
Pre-Tax | After-Tax | Diluted EPS | |||||||||||
Loss from Continuing Operations - GAAP | $ | (461,848 | ) | $ | (419,356 | ) | $ | (8.48 | ) | ||||
Adjustments: | |||||||||||||
Goodwill Impairment | 535,227 | 523,510 | 10.59 | ||||||||||
Loss on divestitures | 30,741 | 30,741 | 0.62 | ||||||||||
Curtailment & settlement, net | (25,722 | ) | (17,491 | ) | (0.35 | ) | |||||||
Refinancing costs | 1,986 | 1,350 | 0.03 | ||||||||||
Restructuring costs (non-cash) | 3,005 | 2,043 | 0.04 | ||||||||||
Restructuring costs (cash) | 40,069 | 27,247 | 0.55 | ||||||||||
Estimated impact of Tax Reform | — | (22,398 | ) | (0.45 | ) | ||||||||
Adjusted Income from continuing operations - non-GAAP | $ | 123,458 | $ | 125,646 | $ | 2.53 | * | ||||||
* Difference due to rounding | |||||||||||||
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(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Three Months Ended | |||||||||||||
March 31, 2017 | |||||||||||||
Pre-Tax | After-Tax | Diluted EPS | |||||||||||
Loss from Continuing Operations - GAAP | $ | (140,270 | ) | $ | (126,825 | ) | $ | (2.57 | ) | ||||
Adjustments: | |||||||||||||
Goodwill impairment | 266,298 | 266,298 | 5.38 | ||||||||||
Restructuring costs (non-cash) | 501 | 461 | 0.01 | ||||||||||
Restructuring costs (cash) | 13,997 | 12,882 | 0.26 | ||||||||||
Adjusted Income from continuing operations - non-GAAP | $ | 140,526 | $ | 152,816 | $ | 3.09 | * | ||||||
* Difference due to rounding | |||||||||||||
Twelve Months Ended | |||||||||||||
March 31, 2017 | |||||||||||||
Pre-Tax | After-Tax | Diluted EPS | |||||||||||
Loss from Continuing Operations - GAAP | $ | (23,612 | ) | $ | (42,952 | ) | $ | (0.87 | ) | ||||
Adjustments: | |||||||||||||
Goodwill impairment | 266,298 | 266,298 | 5.39 | ||||||||||
Loss on divestitures | 19,124 | 17,980 | 0.36 | ||||||||||
Triumph Precision Components - Strike related costs | 15,701 | 14,450 | 0.29 | ||||||||||
Triumph Precision Components - Inventory write-down | 6,089 | 5,604 | 0.11 | ||||||||||
Triumph Aerospace Structures - UAS program | 14,200 | 13,068 | 0.26 | ||||||||||
Restructuring costs (non-cash) | 10,797 | 9,937 | 0.20 | ||||||||||
Restructuring costs (cash) | 42,177 | 38,816 | 0.79 | ||||||||||
Adjusted Income from continuing operations - non-GAAP | $ | 350,774 | $ | 323,201 | $ | 6.59 | * | ||||||
* Difference due to rounding | |||||||||||||
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FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Cash provided by operations, is provided for consistency and comparability. We also use free cash flow 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 our Operating income to Adjusted Operating income as noted above.
Three Months Ended | Twelve Months Ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Operating (loss) income - GAAP | $ | (279,959 | ) | $ | (115,490 | ) | $ | (362,406 | ) | $ | 56,889 | |||||
Adjustments: | ||||||||||||||||
Goodwill & tradename impairments | 345,000 | 266,298 | 535,227 | 266,298 | ||||||||||||
Restructuring costs (non-cash) | 467 | 501 | 3,005 | 10,797 | ||||||||||||
Restructuring costs (cash) | 6,319 | 13,997 | 40,069 | 42,177 | ||||||||||||
Loss on divestitures | 10,370 | — | 30,741 | 19,124 | ||||||||||||
Triumph Precision Components - Strike related costs | — | — | — | 15,701 | ||||||||||||
Other inventory impairments | — | — | — | 20,289 | ||||||||||||
Curtailment & settlement, net | (11,146 | ) | — | (25,722 | ) | — | ||||||||||
Adjusted Operating income - non-GAAP | $ | 71,051 | $ | 165,306 | $ | 220,914 | $ | 431,275 | ||||||||
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(Continued)
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.
Three Months Ended | Twelve Months Ended | ||||||||||
March 31, | March 31, | ||||||||||
2018 | 2018 | 2017 | |||||||||
Cash flow from operations | $ | (90,615 | ) | $ | (288,893 | ) | $ | 281,522 | |||
Less: | |||||||||||
Capital expenditures | (10,118 | ) | (42,050 | ) | (51,832 | ) | |||||
Free cash flow | $ | (100,733 | ) | $ | (330,943 | ) | $ | 229,690 | |||
The Company provides earnings per share guidance on an adjusted non-GAAP basis excluding the effects of transformation related costs, gains (losses) on divestitures, impairments, one-time pension & OPEB benefits (charges) and other non-recurring items, such as the adoption ASU 2017-07. The following table reconciles earnings per share on a GAAP basis to adjusted earnings per diluted share guidance.
Guidance - earnings per diluted share - GAAP | $0.00 - $0.50 | |
per share effect of: | ||
Cumulative effect of adoption of ASU 2017-07 (Pension) | $1.46 - $1.52 | |
Transformation related costs | $0.04 - $0.08 | |
Guidance - adjusted earnings per diluted share | $1.50 - $2.10 | |
(Continued)
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:
March 31, | March 31, | |||||||
2018 | 2017 | |||||||
Calculation of Net Debt | ||||||||
Current portion | $ | 16,527 | $ | 160,630 | ||||
Long-term debt | 1,421,757 | 1,035,670 | ||||||
Total debt | 1,438,284 | 1,196,300 | ||||||
Plus: Deferred debt issuance costs | 16,949 | 11,752 | ||||||
Less: Cash | (35,819 | ) | (69,633 | ) | ||||
Net debt | $ | 1,419,414 | $ | 1,138,419 | ||||
Calculation of Capital | ||||||||
Net debt | $ | 1,419,414 | $ | 1,138,419 | ||||
Stockholders' equity | 456,569 | 846,473 | ||||||
Total capital | $ | 1,875,983 | $ | 1,984,892 | ||||
Percent of net debt to capital | 75.7 | % | 57.4 | % | ||||
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