Triumph Group Reports Fourth Quarter Fiscal 2018 Results

Introduces Fiscal Year 2019 Guidance Reflecting Year-Over-Year Sales Growth

BERWYN, Pa.--()--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.

“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.”

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.”

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

 

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 535.2 523.5 10.59
Loss on divestitures 30.7 30.7 0.62
Curtailment & settlement, net (25.7 ) (17.5 ) (0.35 )
Refinancing costs 2.0 1.4 0.03
Transformation related costs:
Restructuring costs (non-cash) 3.0 2.0 0.04
Restructuring costs (cash) 40.1 27.2 0.55
Estimated impact of tax reform - (22.4 ) (0.45 )
 
Adjusted Income from Continuing Operations - non-GAAP $ 123.5 $ 125.6

$

2.53*

*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.

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)
 
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  
 
 
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
Inventory, 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 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 loss (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  
 
       
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  
 
Operating Margin %
Integrated Systems 20.0 % 19.8 % 19.0 % 19.3 %
Aerospace Structures -59.0 % -27.8 % -25.2 % -4.2 %
Product Support 17.2 % 15.8 % 16.2 % 16.5 %
Consolidated -31.2 % -12.6 % -11.3 % 1.6 %
 
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  
 
 

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 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.
  • 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   Twelve Months Ended
March 31, March 31,
  2018       2017     2018       2017  

Adjusted Earnings before Interest, Taxes,
Depreciation and Amortization (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 & settlement gain, net (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 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 %
 
 
FINANCIAL DATA (UNAUDITED)
         
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
 
Non-GAAP Financial Measure Disclosures (continued)
 

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

Three Months Ended March 31, 2018
Segment Data

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  
 
 

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

Twelve Months Ended March 31, 2018
Segment Data

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

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

Three Months Ended March 31, 2017
Segment Data

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  
 
 

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

Twelve Months Ended March 31, 2017
Segment Data

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 divestitures 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 Earnings (Losses) 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  
 
 

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
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.

 
     
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  
 
 

 

 

Twelve Months Ended
March 31, 2017

Pre-tax

After-tax

Diluted EPS

 
Loss from Continuing Operations- GAAP $ (23,612 ) $ (42,952 ) $ (0.87 )
Goodwill Impairment 266,298 266,298 5.39
Loss on divestitures 19,124 17,980 0.36
Triumph Aerospace Structures - Strike related costs 15,701 14,450 0.29
Triumph Aerospace Structures - 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   $ 6.54   *

*    Difference due to rounding.

 

Adjusted Operating Income is defined as GAAP Operating Income, less expenses/gains associated with the Company's transformation, such as restructuring expenses, gains/losses on divestitures, defined benefit plan gains/losses from curtailments, settlements, etc; impairments of goodwill and other assets. Management believes that this is useful in evaluating operating performance, but this measure should not be used in isolation. The following table reconciles our Operating income to Adjusted Operating income as noted above.

  Three Months Ended   Twelve Months Ended
March 31, 2018   March 31, 2017 March 31, 2018   March 31, 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
 
 

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 cash provided by operations to free cash flow.

  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
 

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 %
 

Contacts

Triumph Group, Inc.
Media:
Michele Long, 610-251-1000
mmlong@triumphgroup.com
or
Investor Relations:
Sheila G. Spagnolo, 610-251-1000
sspagnolo@triumphgroup.com

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