EX-99.1 2 exhibit991q4fy2017.htm EXHIBIT 99.1 - EARNINGS RELEASE DATED 5.24.2017 Exhibit


Exhibit 99.1
    
logowhitea11.jpg
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
AND FULL FISCAL YEAR 2017 RESULTS


BERWYN, Pa. - May 24, 2017 - Triumph Group, Inc. (NYSE: TGI) (“Triumph” or the “Company”) today reported financial results for its fourth quarter and full fiscal year ended March 31, 2017.

Fourth Quarter and Full Fiscal Year 2017 Highlights
•
Net sales were $919.9 million for fourth quarter fiscal year 2017.
•
Operating income for fourth quarter fiscal year 2017 was $150.8 million, reflecting an operating margin of 16% that excludes a $266.3 million non-cash charge for the impairment of goodwill for Triumph Aerospace Structures.
•
Net income for fourth quarter fiscal year 2017 was $139.5 million, or $2.81 per diluted share, excluding the aforementioned impairment charge.
•
Fourth quarter fiscal year 2017 results also included transformation related costs of $14.5 million.
•
Cash flow from operations for fourth quarter fiscal year 2017 was $454.0 million, and free cash flow was $498.3 million, both of which included an increase in customer advances of approximately $324.0 million.
•
For the full fiscal year 2017, sales were $3.5 billion, adjusted earnings per diluted share were $6.54 and free cash flow was $315.7 million.
“Our fourth quarter performance and year-end results reflect continued strength in Integrated Systems and Product Support, improved profitability in Precision Components, as well as mutually-beneficial contract amendments in our Aerospace Structures business,” said Daniel J. Crowley, Triumph’s president and chief executive officer. “Over the past four quarters, we continued to improve program performance and rebuild customer confidence, leading to new business opportunities in both commercial and defense markets. As a result of our One Triumph transformation strategy, we realized new operational and go-to-market efficiencies, growing our backlog sequentially as a result of our enhanced business development efforts. At



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the same time, we are addressing the operational and financial challenges in Aerospace Structures to better position this business unit for the future.”
 
“Under our transformation plan, we delivered three consecutive quarters of improved free cash flow and exceeded our fiscal year 2017 cost reduction goals, realizing $69 million in savings which will benefit future years. We anticipate an incremental $70 million in cost savings in fiscal year 2018. Looking ahead, we will continue to enhance shareholder value from a stronger backlog and improved performance across the business.”

Fourth Quarter Fiscal Year 2017 Overview

Net sales for the fourth quarter of fiscal year 2017 declined 13% from the prior year quarter. On an organic basis, excluding the impact of divestitures, sales were down 13% primarily due to production rate reductions by customers on the 747-8, C-17 and G450/550 programs, changes in model mix, decreased volume in military end market and foreign exchange rates. These factors were partially offset by increased production rates on the 767/Tanker program and stronger organic sales in the Product Support segment resulting from key contract wins with regional and commercial operators for structures and interiors.

Operating income included $14.5 million of restructuring costs and an impairment charge of $266.3 million. Cumulative catch-up adjustments on long-term contracts were a net favorable $72.7 million, which included the benefit of positive adjustments related to the 747-8 program.

Net loss for the fourth quarter of fiscal year 2017 was $126.8 million, or a loss of $2.57 per share. Triumph’s results included the following:


($ millions except EPS)
 
Pre-tax
 
After-tax
 
Diluted EPS
Loss from Continuing Operations - GAAP
 
$(140.3)
    
$(126.8)
 
$(2.57)
Triumph Aerospace Structures - Goodwill impairment
 
266.3
 
266.3
 
5.38
 
 
 
 
 
 
 
Income from Continuing Operations ex-goodwill impairment
 
$126.0
    
$139.5
 
$2.81
 
 
 
 
 
 
 
Transformation related costs:
 
 
 
 
 
 
Restructuring costs (non-cash)
 
0.5
 
0.5
 
0.01
Restructuring costs (cash)
 
14.0
 
12.9
 
0.27
 
 
 
 
 
 
 
Adjusted Income from Continuing Operations - non-GAAP
 
$140.5
    
$152.8
 
$3.09









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Net loss for fiscal year 2017 was $43.0 million or a loss of $0.87 per share and included the following:


($ millions except EPS)
 
Pre-tax
 
After-tax
 
Diluted EPS
Loss from Continuing Operations - GAAP
 
$(23.6)
    
$(43.0)
 
$(0.87)
Triumph Aerospace Structures - Goodwill impairment
 
266.3
 
266.3
 
5.39
Loss on divestitures
 
19.1
 
18.0
 
0.36
 
 
 
 
 
 
 
Income from Continuing Operations ex-goodwill impairment & divestitures
 
$261.8
 
$241.3
 
$4.88
 
 
 
 
 
 
 
Transformation related costs:
 
 
 
 
 
 
Restructuring costs (non-cash)
 
10.7
 
9.9
 
0.20
Restructuring costs (cash)
 
42.2
 
38.8
 
0.79
 
 
 
 
 
 
 
Other previously announced adjustments:
 
 
 
 
 
 
Triumph Precision Components - Strike related Costs
 
15.7
 
14.5
 
0.29
Triumph Precision Components - Inventory write-down
 
6.1
 
5.6
 
0.11
Triumph Aerospace Structures - UAS program
 
14.2
 
13.1
 
0.26
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Income from Continuing Operations - non-GAAP
 
$350.7
    
$323.2
 
$6.54


The number of shares used in computing diluted earnings per share for the fourth quarter of fiscal year 2017 was 49.4 million.

For the quarter ended March 31, 2017, cash flow from operations was $454.0 million, which included approximately $324.0 million of increases in customer advances. Excluding these increases in customer advances, cash flow from operations was $130.0 million, a sequential improvement from a cash use of $41.4 million resulting from strong working capital management partially offset by continued investment in key development programs and restructuring efforts. As previously announced, on May 5, 2017, Triumph reached an agreement with its lender group on amendments to its credit agreement to provide the Company with greater financial flexibility as it continues executing its transformation plan.

Outlook

Based on anticipated aircraft production rates and divestitures completed in fiscal year 2017, the Company forecasts revenue for fiscal year 2018 to be approximately $3.1 to $3.2 billion, and to increase in fiscal year 2019 as development programs enter into production and sales from new wins offset sunsetting programs. The Company will provide additional fiscal year 2018 guidance when it has analyzed the impact of recently settled contracts and has greater visibility regarding the timing of ongoing customer negotiations.

Commenting on the outlook, Mr. Crowley said, “During fiscal 2018, we will demonstrate follow-through on our comprehensive efforts in fiscal 2017 to streamline our structure, reduce costs, resolve contract issues, and grow our backlog. We remain focused on performing to our


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commitments and enhancing our customer relationships which we expect to lead to improving profitability, stronger free cash flow and, ultimately, greater value for our shareholders.”

Conference Call

Triumph Group will hold a conference call today, May 24th at 8:30 a.m. (ET) to discuss the fourth quarter fiscal year 2017 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 24th to May 30th by calling (855) 859-2056 (Domestic) or (404) 537-3406 (International), passcode #20731746.

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 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, 2016.




FINANCIAL DATA (UNAUDITED) ON FOLLOWING PAGES






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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
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
 
Net sales
 
$
919,914

 
$
1,057,794

 
$
3,532,799

 
$
3,886,072

 
 
 
 
 
 
 
 
 
Operating (loss) income
 
(115,489
)
 
(1,182,769
)
 
56,889

 
(1,091,106
)
 
 
 
 
 
 
 
 
 
Interest expense and other
 
24,781

 
18,502

 
80,501

 
68,041

Income tax (benefit) expense
 
(13,445
)
 
(117,616
)
 
19,340

 
(111,187
)
 
 
 
 
 
 
 
 
 
Net loss
 
$
(126,825
)
 
$
(1,083,655
)
 
$
(42,952
)
 
$
(1,047,960
)
 
 
 
 
 
 
 
 
 
Earnings per share - basic:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
$
(2.57
)
 
$
(22.01
)
 
$
(0.87
)
 
$
(21.29
)
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic
 
49,350

 
49,239

 
49,303

 
49,218

 
 
 
 
 
 
 
 
 
Earnings per share - diluted:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
$
(2.57
)
 
$
(22.01
)
 
$
(0.87
)
 
$
(21.29
)
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - diluted
 
49,350

 
49,239

 
49,303

 
49,218

 
 
 
 
 
 
 
 
 
Dividends declared and paid per common share
 
$
0.04

 
$
0.04

 
$
0.16

 
$
0.16










(Continued)
 FINANCIAL DATA (UNAUDITED)
 
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except per share data)
 
BALANCE SHEET
 
Unaudited
 
Audited
 
 
March 31,
 
March 31,
 
 
2017
 
2016
Assets
 
 
 
 
Cash and cash equivalents
 
$
69,633

 
$
20,984

Accounts receivable, net
 
311,792

 
444,208

Inventories, net of unliquidated progress payments of $222,485 and $123,155
 
1,340,175

 
1,236,190

Prepaid and other current assets
 
30,064

 
41,259

Assets held for sale
 
21,255

 
—

   Current assets
 
1,772,919

 
1,742,641

 
 
 
 
 
Property and equipment, net
 
805,030

 
889,734

Goodwill
 
1,142,605

 
1,444,254

Intangible assets, net
 
592,364

 
649,612

Other, net
 
101,682

 
108,852

 
 
 
 
 
Total assets
 
$
4,414,600

 
$
4,835,093

 
 
 
 
 
Liabilities & Stockholders' Equity
 
 
 
 
Current portion of long-term debt
 
$
160,630

 
$
42,441

Accounts payable
 
481,243

 
410,225

Accrued expenses
 
674,379

 
683,208

Liabilities related to assets held for sale
 
18,008

 
—

   Current liabilities
 
1,334,260

 
1,135,874

 
 
 
 
 
Long-term debt, less current portion
 
1,035,670

 
1,374,879

Accrued pension and post-retirement benefits, noncurrent
 
592,134

 
664,664

Deferred income taxes, noncurrent
 
68,107

 
62,453

Other noncurrent liabilities
 
537,956

 
662,279

 
 
 
 
 
Stockholders' Equity:
 
 
 
 
Common stock, $.001 par value, 100,000,000 shares authorized, 52,460,920 and 52,460,920 shares issued; 49,573,029 and 49,328,999 shares outstanding
 
51

 
51

Capital in excess of par value
 
846,807

 
851,102

Treasury stock, at cost, 2,887,891 and 3,131,921 shares
 
(183,696
)
 
(199,415
)
Accumulated other comprehensive income
 
(396,178
)
 
(347,162
)
Retained earnings
 
579,489

 
630,368

Total stockholders' equity
 
846,473

 
934,944

 
 
 
 
 
Total liabilities and stockholders' equity
 
$
4,414,600

 
$
4,835,093

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(Continued)
 FINANCIAL DATA (UNAUDITED)
 
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
 
SEGMENT DATA
 
Three Months Ended
 
Twelve Months Ended
 
 
 
March 31,
 
March 31,
 
 
 
2017
 
2016
 
2017
 
2016
 
Net Sales:
 
 
 
 
 
 
 
 
 
Integrated Systems
 
$
282,002

 
$
302,802

 
$
1,040,805

 
$
1,094,703

 
Aerospace Structures
 
338,751

 
423,620

 
1,294,865

 
1,550,850

 
Precision Components
 
247,565

 
280,357

 
987,919

 
1,061,607

 
Product Support
 
81,008

 
84,745

 
338,325

 
311,394

 
Elimination of inter-segment sales
 
(29,412
)
 
(33,730
)
 
(129,115
)
 
(132,482
)
 
 
 
$
919,914

 
$
1,057,794

 
$
3,532,799

 
$
3,886,072

 
 
 
 
 
 
 
 
 
 
 
Operating (Loss) Income:
 
 
 
 
 
 
 
 
 
Integrated Systems
 
$
55,915

 
$
66,671

 
$
201,294

 
$
220,649

 
Aerospace Structures
 
(166,708
)
 
(1,222,182
)
 
(108,811
)
 
(1,354,640
)
 
Precision Components
 
11,099

 
1,266

 
18,322

 
75,734

 
Product Support
 
12,815

 
(6,537
)
 
55,801

 
24,977

 
Corporate
 
(28,610
)
 
(21,987
)
 
(109,717
)
 
(57,826
)
 
 
 
$
(115,489
)
 
$
(1,182,769
)
 
$
56,889

 
$
(1,091,106
)
 
 
 
 
 
 
 
 
 
 
 
Depreciation and Amortization:
 
 
 
 
 
 
 
 
 
Integrated Systems
 
$
10,104

 
$
11,170

*
$
40,332

 
$
42,486

*
Aerospace Structures
 
284,236

*
661,032

*
338,525

*
937,877

*
Precision Components
 
11,545

 
19,502

 
53,889

 
59,102

 
Product Support
 
1,807

 
3,657

 
9,037

 
11,009

 
Corporate
 
472

 
418

 
1,461

 
1,642

 
 
 
$
308,164

 
$
695,779

 
$
443,244

 
$
1,052,116

 
 
 
 
 
 
 
 
 
 
 
Amortization of Acquired Contract Liabilities:
 
 
 
 
 
 
 
 
 
Integrated Systems
 
$
(9,659
)
 
$
(11,269
)
 
$
(36,760
)
 
$
(41,585
)
 
Aerospace Structures
 
(21,615
)
 
(20,485
)
 
(81,805
)
 
(87,524
)
 
Precision Components
 
(699
)
 
(682
)
 
(2,439
)
 
(3,254
)
 
 
 
$
(31,973
)
 
$
(32,436
)
 
$
(121,004
)
 
$
(132,363
)
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures:
 
 
 
 
 
 
 
 
 
Integrated Systems
 
$
7,901

 
$
7,833

 
$
16,487

 
$
28,142

 
Aerospace Structures
 
4,787

 
4,102

 
14,607

 
27,596

 
Precision Components
 
4,787

 
3,644

 
15,827

 
20,623

 
Product Support
 
610

 
653

 
2,630

 
2,700

 
Corporate
 
624

 
452

 
2,281

 
986

 
 
 
$
18,709

 
$
16,684

 
$
51,832

 
$
80,047

 
* - Includes Impairment Charges
 
 
 
 
 
 
 
 
 
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(Continued)
 FINANCIAL DATA (UNAUDITED)
 
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
 
Non-GAAP Financial Measure Disclosures
 
We prepare and publicly release quarterly unaudited financial statements prepared in accordance with GAAP. In accordance with Securities and Exchange Commission (the "SEC") guidance on Compliance and Disclosure Interpretations, we also disclose and discuss certain non-GAAP financial measures in our public releases. Currently, the non-GAAP financial measure that we disclose is Adjusted EBITDA, which is our net income before interest, income taxes, amortization of acquired contract liabilities, curtailments, settlements and early retirement incentives, legal settlements, depreciation and amortization. We disclose Adjusted EBITDA on a consolidated and an operating segment basis in our earnings releases, investor conference calls and filings with the SEC. The non-GAAP financial measures that we use may not be comparable to similarly titled measures reported by other companies. Also, in the future, we may disclose different non-GAAP financial measures in order to help our investors more meaningfully evaluate and compare our future results of operations to our previously reported results of operations.
 
We view Adjusted EBITDA as an operating performance measure and, as such, we believe that the GAAP financial measure most directly comparable to it is net income. In calculating Adjusted EBITDA, we exclude from net income the financial items that we believe should be separately identified to provide additional analysis of the financial components of the day-to-day operation of our business. We have outlined below the type and scope of these exclusions and the material limitations on the use of these non-GAAP financial measures as a result of these exclusions. Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as a measure of liquidity, as an alternative to net income (loss), income from continuing operations, or as an indicator of any other measure of performance derived in accordance with GAAP. Investors and potential investors in our securities should not rely on Adjusted EBITDA as a substitute for any GAAP financial measure, including net income (loss) or income from continuing operations. In addition, we urge investors and potential investors in our securities to carefully review the reconciliation of Adjusted EBITDA to net income set forth below,  in our earnings releases and in other filings with the SEC and to carefully review the GAAP financial information included as part of our Quarterly Reports on Form 10-Q and our Annual Reports on Form 10-K that are filed with the SEC, as well as our quarterly earnings releases, and compare the GAAP financial information with our Adjusted EBITDA.
 
Adjusted EBITDA is used by management to internally measure our operating and management performance and by investors as a supplemental financial measure to evaluate the performance of our business that, when viewed with our GAAP results and the accompanying reconciliation, we believe provides additional information that is useful to gain an understanding of the factors and trends affecting our business. We have spent more than 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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(Continued)
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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(Continued)

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,
 
 
2017
 
2016
 
2017
 
2016
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA):
 
 
 
 
 
 
 
 
Net Loss
 
$
(126,825
)
 
$
(1,083,655
)
 
$
(42,952
)
 
$
(1,047,960
)
 
 
 
 
 
 
 
 
 
Add-back:
 
 
 
 
 
 
 
 
     Income tax (benefit) expense
 
(13,445
)
 
(117,616
)
 
19,340

 
(111,187
)
     Interest expense and other
 
24,781

 
18,502

 
80,501

 
68,041

  Curtailment Gain
 
—

 
(4,107
)
 
—

 
(1,244
)
Loss on divestitures
 
—

 
—

 
19,124

 
—

  Legal settlement (gain) charge, net
 
—

 
(6,924
)
 
—

 
5,476

     Amortization of acquired contract liabilities
 
(31,973
)
 
(32,436
)
 
(121,004
)
 
(132,363
)
     Depreciation and amortization
 
308,164

 
695,779

 
443,244

 
1,052,116

 
 
 
 
 
 
 
 
 
Adjusted Earnings (Loss) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")
 
$
160,702

 
$
(530,457
)
 
$
398,253

 
$
(167,121
)
 
 
 
 
 
 
 
 
 
Net sales #
 
919,914

 
1,057,794

 
3,532,799

 
3,886,072

 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin
 
18.1%
 
(51.7)%
 
11.7%
 
(4.5)%
# 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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(Continued)
 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
 
Precision Components
 
Product Support
 
Corporate/Eliminations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Loss
 
$
(126,825
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Add-back:
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax benefit
 
(13,445
)
 
 
 
 
 
 
 
 
 
 
 
Interest expense and other
 
24,781

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating (Loss) Income
 
$
(115,489
)
 
$
55,915

 
$
(166,708
)
 
$
11,099

 
$
12,815

 
$
(28,610
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of acquired contract liabilities
 
(31,973
)
 
(9,659
)
 
(21,615
)
 
(699
)
 
—

 
—

 
Depreciation and amortization
 
308,164

 
10,104

 
284,236

 
11,545

 
1,807

 
472

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")
 
$
160,702

 
$
56,360

 
$
95,913

 
$
21,945

 
$
14,622

 
$
(28,138
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
919,914

 
$
282,002

 
$
338,751

 
$
247,565

 
$
81,008

 
$
(29,412
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin
 
18.1%
 
20.7%
 
30.2%
 
8.9%
 
18.1%
 
n/a
 



-More-













(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
 
Precision Components
 
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

 
$
(108,811
)
 
$
18,322

 
$
55,801

 
$
(109,717
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss on divestitures
 
19,124

 
—

 
—

 
—

 
—

 
19,124

 
Amortization of acquired contract liabilities
 
(121,004
)
 
(36,760
)
 
(81,805
)
 
(2,439
)
 
—

 
—

 
Depreciation and amortization
 
443,244

 
40,332

 
338,525

 
53,889

 
9,037

 
1,461

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")
 
$
398,253

 
$
204,866

 
$
147,909

 
$
69,772

 
$
64,838

 
$
(89,132
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
3,532,799

 
$
1,040,805

 
$
1,294,865

 
$
987,919

 
$
338,325

 
$
(129,115
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin
 
11.7%
 
20.4%
 
12.2%
 
7.1%
 
19.2%
 
n/a
 

-More-













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


 
 
Three Months Ended March 31, 2016
 
 
 
 
 
Segment Data
 
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA):
 
Total
 
Integrated Systems
 
Aerospace Structures
 
Precision Components
 
Product Support
 
Corporate/Eliminations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Loss
 
$
(1,083,655
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Add-back:
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax benefit
 
(117,616
)
 
 
 
 
 
 
 
 
 
 
 
Interest expense and other
 
18,502

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating (Loss) Income
 
$
(1,182,769
)
 
$
66,671

 
$
(1,222,182
)
 
$
1,266

 
$
(6,537
)
 
$
(21,987
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Curtailment gain
 
(4,107
)
 
—

 
—

 
—

 
—

 
(4,107
)
 
Legal settlement (gain) charge, net
 
(6,924
)
 
(8,494
)
 
—

 
1,570

 
—

 
—

 
Amortization of acquired contract liabilities
 
(32,436
)
 
(11,269
)
 
(20,485
)
 
(682
)
 
—

 
—

 
Depreciation and amortization
 
695,779

 
11,170

 
661,032

 
19,502

 
3,657

 
418

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted (Losses) Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")
 
$
(530,457
)
 
$
58,078

 
$
(581,635
)
 
$
21,656

 
$
(2,880
)
 
$
(25,676
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
1,057,794

 
$
302,802

 
$
423,620

 
$
280,357

 
$
84,745

 
$
(33,730
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin
 
(51.7)%
 
19.9%
 
(144.3)%
 
7.7%
 
(3.4)%
 
n/a
 

-More-



















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


 
 
Twelve Months Ended March 31, 2016
 
 
 
 
 
Segment Data
 
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA):
 
Total
 
Integrated Systems
 
Aerospace Structures
 
Precision Components
 
Product Support
 
Corporate/Eliminations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Loss
 
$
(1,047,960
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Add-back:
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax benefit
 
(111,187
)
 
 
 
 
 
 
 
 
 
 
 
Interest expense and other
 
68,041

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating (Loss) Income
 
$
(1,091,106
)
 
$
220,649

 
$
(1,354,640
)
 
$
75,734

 
$
24,977

 
$
(57,826
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Curtailment charge, net
 
(1,244
)
 
—

 
—

 
—

 
—

 
(1,244
)
 
Legal settlement charge (gain), net
 
5,476

 
(8,494
)
 
10,500

 
1,570

 
1,900

 
—

 
Amortization of acquired contract liabilities
 
(132,363
)
 
(41,585
)
 
(87,524
)
 
(3,254
)
 
—

 
—

 
Depreciation and amortization
 
1,052,116

 
42,486

 
937,877

 
59,102

 
11,009

 
1,642

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted (Losses) Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")
 
$
(167,121
)
 
$
213,056

 
$
(493,787
)
 
$
133,152

 
$
37,886

 
$
(57,428
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
3,886,072

 
$
1,094,703

 
$
1,550,850

 
$
1,061,607

 
$
311,394

 
$
(132,482
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin
 
(4.5)%
 
20.2%
 
(33.7)%
 
12.6%
 
12.2%
 
n/a
 

-More-

















(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, 2017
 
 
 
Pre-Tax
 
After-Tax
 
Diluted EPS
 
Loss from Continuing Operations - GAAP
 
$
(140,270
)
 
$
(126,825
)
 
$
(2.57
)
 
Triumph Aerospace Structures - Goodwill impairment
 
266,298

 
266,298

 
5.38

 
Income from Continuing Operations ex-goodwill impairment
 
126,028

 
139,473

 
2.81

 
Transformation related costs:
 
 
 
 
 
 
 
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
)
 
Triumph Aerospace Structures - Goodwill impairment
 
266,298

 
266,298

 
5.39

 
Loss on divestitures
 
19,124

 
17,980

 
0.36

 
Income from Continuing Operations ex-goodwill impairment & divestitures
 
261,810

 
241,326

 
4.88

 
Transformation related costs:
 
 
 
 
 
 
 
Restructuring costs (non-cash)
 
10,797

 
9,937

 
0.20

 
Restructuring costs (cash)
 
42,177

 
38,816

 
0.79

 
Other adjustments:
 
 
 
 
 
 
 
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

 
Adjusted Income from continuing operations - non-GAAP
 
$
350,774

 
$
323,201

 
$
6.54

*
 
 
 
 
 
 
 
 
         * Difference due to rounding
 
 
 
 
 
 
 
-More-






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

 
 
Three Months Ended
 
 
 
March 31, 2016
 
 
 
Pre-Tax
 
After-Tax
 
Diluted EPS
 
Loss from Continuing Operations - GAAP
 
$
(1,201,271
)
 
$
(1,083,655
)
 
$
(22.01
)
 
Adjustments:
 
 
 
 
 
 
 
Triumph Aerospace Structures - Goodwill / Tradename impairment
 
645,161

 
596,054

 
12.08

 
Triumph Aerospace Structures - Bombardier impairment
 
399,758

 
246,428

 
5.00

 
Triumph Aerospace Structures - 747-8 forward loss ^
 
161,400

 
99,494

 
2.02

 
Restructuring charges
 
75,596

 
46,601

 
0.94

 
Other inventory impairments
 
34,353

 
21,177

 
0.43

 
Legal settlements, net
 
(6,924
)
 
(4,268
)
 
(0.09
)
 
Curtailment gain
 
(4,107
)
 
(2,532
)
 
(0.05
)
 
Valuation allowance
 
—

 
146,045

 
2.96

 
Adjusted Income from continuing operations - non-GAAP
 
$
103,966

 
$
65,344

 
$
1.32

*
 
 
 
 
 
 
 
 
         * Difference due to rounding
 
 
 
 
 
 
 

 
 
Twelve Months Ended
 
 
 
March 31, 2016
 
 
 
Pre-Tax
 
After-Tax
 
Diluted EPS
 
Loss from Continuing Operations - GAAP
 
$
(1,159,147
)
 
$
(1,047,960
)
 
$
(21.29
)
 
Adjustments:
 
 
 
 
 
 
 
Triumph Aerospace Structures - Goodwill / Tradename impairment
 
874,361

 
745,584

 
15.12

 
Triumph Aerospace Structures - Bombardier impairment
 
399,758

 
246,428

 
5.00

 
Triumph Aerospace Structures - 747-8 forward loss ^
 
161,400

 
99,494

 
2.02

 
Restructuring charges
 
80,956

 
49,905

 
1.01

 
Other inventory impairments
 
34,353

 
21,177

 
0.43

 
Legal settlements, net
 
5,476

 
3,376

 
0.07

 
Curtailment (gain) loss
 
(1,244
)
 
767

 
0.02

 
Valuation allowance
 
—

 
146,045

 
2.96

 
Adjusted Income from continuing operations - non-GAAP
 
$
395,913

 
$
264,816

 
$
5.37

*
 
 
 
 
 
 
 
 
         * Difference due to rounding
 
 
 
 
 
 
 
^ FY 16 747-8 forward loss was driven by customer imposed production rate reductions; operational and contractual improvements in FY 17 resulted in partial reversals of this reserve and have not been removed from adjusted earnings in FY 17.
 

-More-





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

The following table reconciles our Operating income to Adjusted Operating income as noted above.
 
 
Three Months Ended
 
Twelve Months Ended
 
 
March 31,
 
March 31,
 
 
2017
 
2016
 
2017
 
2016
Operating (loss) income - GAAP
 
$
(115,489
)
 
$
(1,182,769
)
 
$
56,889

 
$
(1,091,106
)
Adjustments:
 
 
 
 
 
 
 
 
Goodwill & tradename impairments
 
266,298

 
645,161

 
266,298

 
874,361

Triumph Aerospace Structures - Bombardier impairment
 
—

 
399,758

 
—

 
399,758

Triumph Aerospace Structures - 747-8 forward loss
 
—

 
161,400

 
—

 
161,400

Restructuring costs (non-cash)
 
501

 
21,224

 
10,797

 
23,724

Restructuring costs (cash)
 
13,997

 
54,372

 
42,177

 
57,232

Loss on divestitures
 
—

 
—

 
19,124

 
—

Triumph Precision Components - Strike related costs
 
—

 
—

 
15,701

 
—

Other inventory impairments
 
—

 
34,353

 
20,289

 
34,353

Legal settlements, net
 
—

 
(6,924
)
 
—

 
5,476

Curtailment gain
 
—

 
(4,107
)
 
—

 
(1,244
)
Adjusted Operating income - non-GAAP
 
$
165,307

 
$
122,468

 
$
431,275

 
$
463,954

 
 
 
 
 
 
 
 
 

-More-






























(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.

 
 
Twelve Months Ended
 
 
March 31,
 
 
2017
 
2016
 
 
 
 
 
Cash flow from operations
 
281,319

 
83,863

Less:
 
 
 
 
Capital expenditures
 
(51,832
)
 
(80,047
)
Sale of assets
 
16,823

 
—

Sale of business
 
69,364

 
—

Free cash flow
 
$
315,674

 
$
3,816


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,
 
 
2017
 
2016
Calculation of Net Debt
 
 
 
 
Current portion
 
$
160,630

 
$
42,441

Long-term debt
 
1,035,670

 
1,374,879

Total debt
 
1,196,300

 
1,417,320

Plus: Deferred debt issuance costs
 
11,752

 
8,971

Less: Cash
 
(69,633
)
 
(20,984
)
Net debt
 
$
1,138,419

 
$
1,405,307

 
 
 
 
 
Calculation of Capital
 
 
 
 
Net debt
 
$
1,138,419

 
$
1,405,307

Stockholders' equity
 
846,473

 
934,944

Total capital
 
$
1,984,892

 
$
2,340,251

 
 
 
 
 
Percent of net debt to capital
 
57.4
%
 
60.0
%
 
 
 
 
 

#######