Delaware | 1-12235 | 51-0347963 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
899 Cassatt Road, Suite 210 | 19312 | |||
Berwyn, Pennsylvania | (Zip Code) | |||
(Address of principal executive offices) |
Item 2.02 | Results of Operations and Financial Condition. |
• | For the fiscal quarter ended September 30, 2015, sales mix was as follows: commercial was 57% (compared to 59% in the prior year period), military was 21% (compared to 27% in the prior year period), business jets were 18% (compared to 10% in the prior year period), regional jets were 2% (same as the prior year period) and non-aviation was 2% (same as the prior year period). |
• | The top ten programs represented in the Aerostructures Group backlog were the Gulfstream, 747, 777, 767/Tanker, A330/A340, 787, C-17, 737, Bombardier Global 7000/8000 and V-22 programs, respectively. |
• | The top ten programs represented in the Aerospace Systems Group backlog were the A320/A321, 737, 787, V-22, A380, 777, Bell Helicopter 429, Sikorsky UH60, CH-47 and C-130 programs, respectively. |
• | For the fiscal quarter ended September 30, 2015, The Boeing Company (commercial, military and space) accounted for 39.3% of net sales and Gulfstream accounted for 13.2% of net sales. |
• | Same store sales for the fiscal quarter ended September 30, 2015 decreased 12% over the prior year period. Aerostructures same store sales for the fiscal quarter ended September 30, 2015 were $527.5 million, a decrease of 17% over the prior year period. Aerospace Systems same store sales for the fiscal quarter ended September 30, 2015 were $280.2 million, a decrease of 3% over the prior year period. Aftermarket Services same store sales for the fiscal quarter ended September 30, 2015 were $66.1 million, a decrease of 11% over the prior year period. |
• | For the fiscal quarter ended September 30, 2015, OEM sales represented 85% of net sales (compared to 84% in the prior year period), Aftermarket sales represented 14% of net sales (same as the prior year period), and Other represented 1% of net sales (compared to 2% in the prior year period). |
• | Export sales for the fiscal quarter ended September 30, 2015 were $188.3 million, a decrease of 2% over the comparable prior year period. |
• | Aftermarket sales represented 17.3% of revenue in Aerospace Systems for the fiscal quarter ended September 30, 2015, compared to 18.8% in the prior year period. |
Item 9.01 | Financial Statements and Exhibits. | |
(d) | Exhibits. |
Exhibit No. | Description | |
99.1 | Press release dated October 28, 2015 |
Date: | October 28, 2015 | TRIUMPH GROUP, INC. | |
By: | /s/ Thomas A. Quigley, III | ||
Thomas A. Quigley, III | |||
Vice President and Controller |
Exhibit No. | Description | |
99.1 | Press release dated October 28, 2015 |
• | Net sales for second quarter fiscal year 2016 were $954.8 million |
• | Operating income for second quarter fiscal year 2016 was $110.0 million and included a charge of $5.4 million related to a facility consolidation in the Aerospace Systems Group. Excluding this charge, operating income was $115.4 million, reflecting an operating margin of 12% |
• | Net income for second quarter fiscal year 2016 was $61.6 million, or $1.25 per diluted share. Excluding the facility consolidation charge noted above, earnings per share were $1.32 per diluted share |
• | Cash flow utilization from operations for second quarter fiscal year 2016 was $30.1 million |
Three Months Ended | Six Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
CONDENSED STATEMENTS OF INCOME | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Net sales | $ | 954,774 | $ | 994,123 | $ | 1,914,412 | $ | 1,891,028 | ||||||||
Operating income | 110,047 | 114,698 | 217,913 | 355,222 | ||||||||||||
Interest expense and other | 15,631 | 15,386 | 33,747 | 57,746 | ||||||||||||
Income tax expense | 32,804 | 31,866 | 59,823 | 101,786 | ||||||||||||
Net income | $ | 61,612 | $ | 67,446 | $ | 124,343 | $ | 195,690 | ||||||||
Earnings per share - basic: | ||||||||||||||||
Net income | $ | 1.25 | $ | 1.32 | $ | 2.53 | $ | 3.81 | ||||||||
Weighted average common shares outstanding - basic | 49,219 | 51,015 | 49,208 | 51,351 | ||||||||||||
Earnings per share - diluted: | ||||||||||||||||
Net income | $ | 1.25 | $ | 1.32 | $ | 2.52 | $ | 3.79 | ||||||||
Weighted average common shares outstanding - diluted | 49,308 | 51,169 | 49,311 | 51,627 | ||||||||||||
Dividends declared and paid per common share | $ | 0.04 | $ | 0.04 | $ | 0.08 | $ | 0.08 |
BALANCE SHEET | Unaudited | Audited | ||||||
September 30, | March 31, | |||||||
2015 | 2015 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 39,089 | $ | 32,617 | ||||
Accounts receivable, net | 540,902 | 521,601 | ||||||
Inventories, net of unliquidated progress payments of $138,696 and $189,923 | 1,556,487 | 1,280,274 | ||||||
Rotable assets | 52,335 | 48,820 | ||||||
Deferred income taxes | 73,823 | 145,352 | ||||||
Prepaid and other current assets | 28,775 | 23,069 | ||||||
Current assets | 2,291,411 | 2,051,733 | ||||||
Property and equipment, net | 914,304 | 950,734 | ||||||
Goodwill | 2,022,820 | 2,019,225 | ||||||
Intangible assets, net | 934,108 | 966,365 | ||||||
Other, net | 109,928 | 107,997 | ||||||
Total assets | $ | 6,272,571 | $ | 6,096,054 | ||||
Liabilities & Stockholders' Equity | ||||||||
Current portion of long-term debt | $ | 43,048 | $ | 42,255 | ||||
Accounts payable | 399,927 | 429,134 | ||||||
Accrued expenses | 404,273 | 411,848 | ||||||
847,248 | 883,237 | |||||||
Long-term debt, less current portion | 1,556,647 | 1,326,345 | ||||||
Accrued pension and post-retirement benefits, noncurrent | 492,433 | 538,381 | ||||||
Deferred income taxes, noncurrent | 401,396 | 410,543 | ||||||
Other noncurrent liabilities | 717,465 | 801,764 | ||||||
Stockholders' Equity: | ||||||||
Common stock, $.001 par value, 100,000,000 shares authorized, 52,460,920 and 52,460,920 shares issued; 49,307,138 and 49,273,053 shares outstanding | 51 | 51 | ||||||
Capital in excess of par value | 849,847 | 851,940 | ||||||
Treasury stock, at cost, 3,153,782 and 3,187,867 shares | (200,457 | ) | (203,514 | ) | ||||
Accumulated other comprehensive loss | (198,677 | ) | (198,910 | ) | ||||
Retained earnings | 1,806,618 | 1,686,217 | ||||||
Total stockholders' equity | 2,257,382 | 2,135,784 | ||||||
Total liabilities and stockholders' equity | $ | 6,272,571 | $ | 6,096,054 |
SEGMENT DATA | Three Months Ended | Six Months Ended | ||||||||||||||
September 30, | September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net Sales: | ||||||||||||||||
Aerostructures | $ | 604,874 | $ | 632,510 | $ | 1,216,711 | $ | 1,244,670 | ||||||||
Aerospace Systems | 280,155 | 288,902 | 557,803 | 508,754 | ||||||||||||
Aftermarket Services | 73,777 | 74,343 | 148,522 | 141,951 | ||||||||||||
Elimination of inter-segment sales | (4,032 | ) | (1,632 | ) | (8,624 | ) | (4,347 | ) | ||||||||
$ | 954,774 | $ | 994,123 | $ | 1,914,412 | $ | 1,891,028 | |||||||||
Operating Income (Loss): | ||||||||||||||||
Aerostructures | $ | 67,099 | $ | 70,008 | $ | 130,243 | $ | 138,827 | ||||||||
Aerospace Systems | 46,140 | 46,214 | 97,393 | 83,567 | ||||||||||||
Aftermarket Services | 9,125 | 11,620 | 19,112 | 22,124 | ||||||||||||
Corporate | (12,317 | ) | (13,144 | ) | (28,835 | ) | 110,704 | |||||||||
$ | 110,047 | $ | 114,698 | $ | 217,913 | $ | 355,222 | |||||||||
Depreciation and Amortization: | ||||||||||||||||
Aerostructures | $ | 25,506 | $ | 25,314 | $ | 54,225 | $ | 50,835 | ||||||||
Aerospace Systems | 14,251 | 11,147 | 26,205 | 20,665 | ||||||||||||
Aftermarket Services | 2,428 | 1,926 | 4,890 | 3,803 | ||||||||||||
Corporate | 390 | 627 | 789 | 1,262 | ||||||||||||
$ | 42,575 | $ | 39,014 | $ | 86,109 | $ | 76,565 | |||||||||
Amortization of Acquired Contract Liabilities: | ||||||||||||||||
Aerostructures | (20,393 | ) | (4,783 | ) | (44,990 | ) | (9,900 | ) | ||||||||
Aerospace Systems | (10,011 | ) | (10,082 | ) | (20,512 | ) | (13,932 | ) | ||||||||
$ | (30,404 | ) | $ | (14,865 | ) | $ | (65,502 | ) | $ | (23,832 | ) | |||||
Capital Expenditures: | ||||||||||||||||
Aerostructures | $ | 12,897 | $ | 23,027 | $ | 24,523 | $ | 38,638 | ||||||||
Aerospace Systems | 6,423 | 10,588 | 11,934 | 16,251 | ||||||||||||
Aftermarket Services | 711 | 2,353 | 1,333 | 4,033 | ||||||||||||
Corporate | 81 | 29 | 338 | 152 | ||||||||||||
$ | 20,112 | $ | 35,997 | $ | 38,128 | $ | 59,074 |
• | 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. |
Three Months Ended | Six Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA): | ||||||||||||||||
Net Income | $ | 61,612 | $ | 67,446 | $ | 124,343 | $ | 195,690 | ||||||||
Add-back: | ||||||||||||||||
Income tax expense | 32,804 | 31,866 | 59,823 | 101,786 | ||||||||||||
Interest expense and other | 15,631 | 15,386 | 33,747 | 57,746 | ||||||||||||
Curtailment charge | — | — | 2,863 | — | ||||||||||||
Gain on legal settlement, net | — | — | — | (134,693 | ) | |||||||||||
Amortization of acquired contract liabilities | (30,404 | ) | (14,865 | ) | (65,502 | ) | (23,832 | ) | ||||||||
Depreciation and amortization | 42,575 | 39,014 | 86,109 | 76,565 | ||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 122,218 | $ | 138,847 | $ | 241,383 | $ | 273,262 | ||||||||
Net Sales | $ | 954,774 | $ | 994,123 | $ | 1,914,412 | $ | 1,891,028 | ||||||||
Adjusted EBITDA Margin | 13.2% | 14.2% | 13.1% | 14.6% |
Three Months Ended September 30, 2015 | |||||||||||||||||||||
Segment Data | |||||||||||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | Total | Aerostructures | Aerospace Systems | Aftermarket Services | Corporate/Eliminations | ||||||||||||||||
Net Income | $ | 61,612 | |||||||||||||||||||
Add-back: | |||||||||||||||||||||
Income tax expense | 32,804 | ||||||||||||||||||||
Interest expense and other | 15,631 | ||||||||||||||||||||
Operating Income (Loss) | $ | 110,047 | $ | 67,099 | $ | 46,140 | $ | 9,125 | $ | (12,317 | ) | ||||||||||
Amortization of acquired contract liabilities | (30,404 | ) | (20,393 | ) | (10,011 | ) | — | — | |||||||||||||
Depreciation and amortization | 42,575 | 25,506 | 14,251 | 2,428 | 390 | ||||||||||||||||
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 122,218 | $ | 72,212 | $ | 50,380 | $ | 11,553 | $ | (11,927 | ) | ||||||||||
Net Sales | $ | 954,774 | $ | 604,874 | $ | 280,155 | $ | 73,777 | $ | (4,032 | ) | ||||||||||
Adjusted EBITDA Margin | 13.2% | 12.4% | 18.6% | 15.7% | n/a |
Six Months Ended September 30, 2015 | |||||||||||||||||||||
Segment Data | |||||||||||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | Total | Aerostructures | Aerospace Systems | Aftermarket Services | Corporate/Eliminations | ||||||||||||||||
Net Income | $ | 124,343 | |||||||||||||||||||
Add-back: | |||||||||||||||||||||
Income tax expense | 59,823 | ||||||||||||||||||||
Interest expense and other | 33,747 | ||||||||||||||||||||
Operating Income (Loss) | $ | 217,913 | $ | 130,243 | $ | 97,393 | $ | 19,112 | $ | (28,835 | ) | ||||||||||
Curtailment charge | 2,863 | — | — | — | 2,863 | ||||||||||||||||
Amortization of acquired contract liabilities | (65,502 | ) | (44,990 | ) | (20,512 | ) | — | — | |||||||||||||
Depreciation and amortization | 86,109 | 54,225 | 26,205 | 4,890 | 789 | ||||||||||||||||
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 241,383 | $ | 139,478 | $ | 103,086 | $ | 24,002 | $ | (25,183 | ) | ||||||||||
Net Sales | $ | 1,914,412 | $ | 1,216,711 | $ | 557,803 | $ | 148,522 | $ | (8,624 | ) | ||||||||||
Adjusted EBITDA Margin | 13.1% | 11.9% | 19.2% | 16.2% | n/a |
Three Months Ended September 30, 2014 | |||||||||||||||||||||
Segment Data | |||||||||||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | Total | Aerostructures | Aerospace Systems | Aftermarket Services | Corporate / Eliminations | ||||||||||||||||
Net Income | $ | 67,446 | |||||||||||||||||||
Add-back: | |||||||||||||||||||||
Income tax expense | 31,866 | ||||||||||||||||||||
Interest expense and other | 15,386 | ||||||||||||||||||||
Operating Income (Loss) | $ | 114,698 | $ | 70,008 | $ | 46,214 | $ | 11,620 | $ | (13,144 | ) | ||||||||||
Amortization of acquired contract liabilities | (14,865 | ) | (4,783 | ) | (10,082 | ) | — | — | |||||||||||||
Depreciation and amortization | 39,014 | 25,314 | 11,147 | 1,926 | 627 | ||||||||||||||||
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 138,847 | $ | 90,539 | $ | 47,279 | $ | 13,546 | $ | (12,517 | ) | ||||||||||
Net Sales | $ | 994,123 | $ | 632,510 | $ | 288,902 | $ | 74,343 | $ | (1,632 | ) | ||||||||||
Adjusted EBITDA Margin | 14.2% | 14.4% | 17.0% | 18.2% | n/a |
Six Months Ended September 30, 2014 | |||||||||||||||||||||
Segment Data | |||||||||||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | Total | Aerostructures | Aerospace Systems | Aftermarket Services | Corporate / Eliminations | ||||||||||||||||
Net Income | $ | 195,690 | |||||||||||||||||||
Add-back: | |||||||||||||||||||||
Income tax expense | 101,786 | ||||||||||||||||||||
Interest expense and other | 57,746 | ||||||||||||||||||||
Operating Income | $ | 355,222 | $ | 138,827 | $ | 83,567 | $ | 22,124 | 110,704 | ||||||||||||
Gain on Legal Settlement, net | (134,693 | ) | — | — | — | (134,693 | ) | ||||||||||||||
Amortization of acquired contract liabilities | (23,832 | ) | (9,900 | ) | (13,932 | ) | — | — | |||||||||||||
Depreciation and amortization | 76,565 | 50,835 | 20,665 | 3,803 | 1,262 | ||||||||||||||||
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 273,262 | $ | 179,762 | $ | 90,300 | $ | 25,927 | $ | (22,727 | ) | ||||||||||
Net Sales | $ | 1,891,028 | $ | 1,244,670 | $ | 508,754 | $ | 141,951 | $ | (4,347 | ) | ||||||||||
Adjusted EBITDA Margin | 14.6% | 14.6% | 18.2% | 18.3% | n/a |
Three Months Ended | ||||||||||||||
September 30, 2015 | Location on | |||||||||||||
Pre-Tax | After-Tax | Diluted EPS | Financial Statements | |||||||||||
Income from Continuing Operations - GAAP | $ | 94,416 | $ | 61,612 | $ | 1.25 | ||||||||
Adjustments: | ||||||||||||||
Facility consolidation costs | 5,360 | 3,484 | 0.07 | Aerospace Systems | ||||||||||
Adjusted Income from continuing operations - non-GAAP | $ | 99,776 | $ | 65,096 | $ | 1.32 | ||||||||
Six Months Ended | ||||||||||||||
September 30, 2015 | Location on | |||||||||||||
Pre-Tax | After-Tax | Diluted EPS | Financial Statements | |||||||||||
Income from Continuing Operations - GAAP | $ | 184,166 | $ | 124,343 | $ | 2.52 | ||||||||
Adjustments: | ||||||||||||||
Facility consolidation costs | 5,360 | 3,484 | 0.07 | Aerospace Systems | ||||||||||
Curtailment charge | 2,863 | 1,861 | 0.04 | Corporate | ||||||||||
Adjusted Income from continuing operations - non-GAAP | $ | 192,389 | $ | 129,688 | $ | 2.63 | ||||||||
Three Months Ended | ||||||||||||||
September 30, 2014 | Location on | |||||||||||||
Pre-Tax | After-Tax | Diluted EPS | Financial Statements | |||||||||||
Income from Continuing Operations - GAAP | $ | 99,312 | $ | 67,446 | $ | 1.32 | ||||||||
Adjustments: | ||||||||||||||
Relocation costs | 196 | 126 | 0.00 | Aerostructures (Primarily) | ||||||||||
Jefferson Street Move: | ||||||||||||||
Disruption | 5,381 | 3,465 | 0.07 | Aerostructures (EAC)** | ||||||||||
Accelerated Depreciation | 2,252 | 1,450 | 0.03 | Aerostructures (EAC)** | ||||||||||
Adjusted Income from continuing operations - non-GAAP | $ | 107,141 | $ | 72,487 | $ | 1.42 | * | |||||||
* Difference due to rounding. | ||||||||||||||
** EAC - estimated costs at completion with respect to contracts within the scope of Accounting Standards Codification 605-35, "Revenue-Construction-Type and Production-Type Contracts" |
Six Months Ended | ||||||||||||||
September 30, 2014 | Location on | |||||||||||||
Pre-Tax | After-Tax | Diluted EPS | Financial Statements | |||||||||||
Income from Continuing Operations - GAAP | $ | 297,476 | $ | 195,690 | $ | 3.79 | ||||||||
Adjustments: | ||||||||||||||
Gain on Legal Settlement | (134,693 | ) | (86,742 | ) | (1.68 | ) | Corporate | |||||||
Refinancing costs | 22,615 | 14,564 | 0.28 | Corporate | ||||||||||
Relocation costs | 3,193 | 2,056 | 0.04 | Aerostructures (Primarily) | ||||||||||
Jefferson Street Move: | ||||||||||||||
Disruption | 8,741 | 5,629 | 0.11 | Aerostructures (EAC) ** | ||||||||||
Accelerated Depreciation | 4,627 | 2,980 | 0.06 | Aerostructures (EAC) ** | ||||||||||
Adjusted Income from continuing operations - non-GAAP | $ | 201,959 | $ | 134,177 | $ | 2.60 | ||||||||
** EAC - estimated costs at completion with respect to contracts within the scope of Accounting Standards Codification 605-35, "Revenue-Construction-Type and Production-Type Contracts" |
Six Months Ended | ||||||||
September 30, | ||||||||
2015 | 2014 | |||||||
Cash flow from operations, before pension contributions | $ | (178,455 | ) | $ | 313,815 | |||
Pension contributions | — | 55,400 | ||||||
Cash (used in) provided by operations | (178,455 | ) | 258,415 | |||||
Less: | ||||||||
Capital expenditures | 38,128 | 59,074 | ||||||
Dividends | 3,943 | 4,090 | ||||||
Free cash flow available for debt reduction, acquisitions and share repurchases | $ | (220,526 | ) | $ | 195,251 |
September 30, | March 31, | |||||||
2015 | 2015 | |||||||
Calculation of Net Debt | ||||||||
Current portion | $ | 43,048 | $ | 42,255 | ||||
Long-term debt | 1,556,647 | 1,326,345 | ||||||
Total debt | 1,599,695 | 1,368,600 | ||||||
Plus: Deferred debt issuance costs | 9,887 | 10,796 | ||||||
Less: Cash | (39,089 | ) | (32,617 | ) | ||||
Net debt | $ | 1,570,493 | $ | 1,346,779 | ||||
Calculation of Capital | ||||||||
Net debt | $ | 1,570,493 | $ | 1,346,779 | ||||
Stockholders' equity | 2,257,382 | 2,135,784 | ||||||
Total capital | $ | 3,827,875 | $ | 3,482,563 | ||||
Percent of net debt to capital | 41.0 | % | 38.7 | % |