Triumph Group Reports First Quarter Fiscal 2019 Results
BERWYN, Pa.--(BUSINESS WIRE)--Aug 8, 2018--Triumph Group, Inc. (NYSE: TGI) (“Triumph” or the “Company”) today reported financial results for its first quarter of fiscal year 2019, which ended June 30, 2018.
First Quarter 2019 HighlightsNet sales were $832.9 million. Operating loss was ($66.5) million, which includes the non-cash ASU 2017-07 pension adjustment of ($87.2) million. On an adjusted basis, operating income was $29.5 million with an adjusted operating margin of 3.5%. Net loss was ($76.5) million, or ($1.54) per share. On an adjusted basis, net income was $17.0 million, or $0.34 per diluted share. Cash used in operations was ($65.7) million, and free cash use was ($77.9) million. Guidance for fiscal 2019 for net sales of $3.3 to $3.4 billion and earnings per share of ($0.55) to $0.15, or $1.50 to $2.10 per diluted share on an adjusted basis. Management provides guidance for cash used from operations of ($150.0) to ($190.0) million and free cash use of ($200.0) to ($250.0) million, which includes approximately ($180.0) million related to the reduction in prior year customer advances, and approximately ($130.0) million related to the Global 7500 program.
“Triumph’s first quarter results demonstrate our continued progress towards achieving our financial performance targets,” stated Daniel J. Crowley, Triumph’s president and chief executive officer. “Consistent with our projections for fiscal 2019, we delivered a year-over-year increase in net sales, with all three business segments generating organic sales growth.”
Mr. Crowley continued, “Our first quarter cash usage was consistent with our expectations and showed both year-over-year and sequential improvement. Excluding the cash consumed by the Global 7500 program and the liquidation of prior year customer advances, free cash flow was positive in the first quarter.”
Mr. Crowley continued, “We expect to use significantly less cash for Aerospace Structures’ programs in fiscal 2019 and fiscal 2020 compared to the two prior years. Our fiscal 2019 cash guidance reflects the improvements the Company has made operationally and in contract negotiations over the past two years and is another waypoint towards consistent positive cash flow. Our continued portfolio reshaping in the first quarter included agreements to divest two non-core businesses, in addition to completing a third divestiture following the end of the quarter, which we expect to further enhance our future profitability and cash flow. Additional divestitures are planned for the second half of FY19.”
First Quarter Fiscal Year 2019 Overview
After accounting for divestitures and the impact of the adoption of ASC 606, sales for the first quarter of fiscal 2019 were up 3% organically from the comparable prior year period. Sales growth was driven by the ramp on the Global 7500 as well as increased rotorcraft deliveries and higher demand for structural component repairs.
First quarter operating loss of ($66.5) million included a previously disclosed $87.2 million non-cash pension charge related to the adoption of the new FASB accounting standard update, ASU 2017-07. Net loss for the first quarter of fiscal year 2019 was ($76.5) million, or ($1.54) per share. On an adjusted basis, net income was $17.0 million, or $0.34 per diluted share. Triumph’s results included the following:
The number of shares used in computing diluted earnings per share for the first quarter of fiscal year 2019 was 49.8 million.
Backlog was $4.4 billion, a 5% increase from the prior year period and down slightly on a sequential basis reflecting increased selectivity in pursuing new awards based on projected profitability and cash flow and the non-linear nature of order timing.
For the quarter ended June 30, 2018, cash flow used in operations was ($65.7) million, reflecting approximately ($53.0) million for the liquidation of customer advances and approximately ($81.0) million of cash used on the Global 7500 program.
Based on anticipated aircraft production rates and completed divestitures, the Company continues to expect that net sales 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 waning programs. The Company expects fiscal year 2019 earnings per share to be ($0.55) to $0.15, or $1.50 to $2.10 per diluted share, adjusted for pension accounting changes, transformation related costs and loss on assets held for sale.
The Company expects fiscal year 2019 cash used in operations of ($150.0) to ($190.0) million, and free cash use of ($200.0) to ($250.0) million, which includes approximately ($180.0) million related to the liquidation of customer advances received in fiscal 2017 and 2018, and approximately ($130.0) million of cash use related to the Global 7500 program.
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.
Triumph Group will hold a conference call today, August 8 th at 8:30 a.m. (ET) to discuss the first quarter fiscal year 2019 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 August 8 th to August 15 th by calling (855) 859-2056 (Domestic) or (404) 537-3406 (International), passcode #2361117.
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, 2018.
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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 and Adjusted EBITDAP, 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 and Adjusted EBITDA, less pension & other postretirement benefits. We disclose Adjusted EBITDA and Adjusted EBITDAP on a consolidated and Adjusted EBITDAP 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.
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