Exhibit 99.1
NEWS RELEASE
|
Media Contact: Michele Long Phone (610) 251-1000 mmlong@triumphgroup.com |
|
|
Investor Relations Contact: Thomas A. Quigley, III Phone (610) 251-1000 tquigley@triumphgroup.com |
TRIUMPH GROUP REPORTS FIRST QUARTER FISCAL 2021 RESULTS
Provides Full Year Fiscal 2021 Net Sales Guidance
BERWYN, Pa. – August 4, 2020 – Triumph Group, Inc. (NYSE: TGI) (“Triumph” or the “Company”) today reported financial results for its first quarter of fiscal year 2021, which ended June 30, 2020.
First Quarter Fiscal 2021
|
• |
Net sales of $495.1 million |
|
• |
Operating loss of $252.4 million with operating margin of (51.0%) and included an impairment charge of $252.4 million; adjusted operating income of $15.4 million with adjusted operating margin of 3.1% |
|
• |
Net loss of $277.3 million, or ($5.35) per share; adjusted net loss of $9.5 million, or ($0.19) per share |
|
• |
Cash flow used in operations of ($197.5) million, and free cash use of ($205.2) million |
Full-Year Fiscal 2021 Net Sales Guidance
|
• |
Net sales between $1.8 - $1.9 billion |
“For the first quarter of our fiscal year, organic revenue decreased by 29% due primarily to expected declines in Aerospace Structures associated with planned reductions from our portfolio transformation and the COVID-19 pandemic. Systems & Support gross margins were in line with the prior year, benefitting from increased military volumes, improved operational efficiencies and cost reduction initiatives,” stated Daniel J. Crowley, Triumph’s president and chief executive officer. We continued executing our plan to exit legacy programs in Aerospace Structures with the recent announcements of the sales of our G650 wing kitting and engineering services program to Gulfstream and of our two Composite structures factories to Arlington Capital Partners. These transactions will benefit Triumph in fiscal 2021 and beyond.”
Mr. Crowley continued, “Our total cash usage for the first quarter was largely associated with working capital expansion, yet contained by the actions we implemented early in the quarter to conserve cash. We expect our cash use to slow in the second quarter and recover in the second half as we exit the last of our cash burning programs and begin to generate positive free cash flow. We are continuing to identify further cost reduction actions to enhance our liquidity position and ensure financial flexibility in the current operating environment while supporting the needs of our customers.”
Mr. Crowley concluded, “The steps we took this quarter build on our momentum and drive improved profitability and cash flow to become a more predictable and diverse business. As we look out to the rest of the year, Triumph remains focused on protecting the health and safety of our people, conserving our cash and partnering with our customers to ensure we are best positioned for recovery for the benefit of all our stakeholders.”
1
First Quarter Fiscal Year 2021 Overview
After accounting for the impact of the divestitures, sales for the first quarter of fiscal 2021 were down 29% organically from the comparable prior year period. The decline was driven by planned reductions on sunsetting and transitioned programs, impacts of the COVID-19 pandemic and resulting production rate decreases primarily on commercial programs, partially offset by increases in military programs.
First quarter operating loss of $252.4 million included a $252.4 million impairment charge of the legacy Aerospace Structures long-lived assets, and $15.4 million of restructuring costs associated with reductions in work force. Net loss for the first quarter of fiscal year 2021 was $277.3 million, or ($5.35) per share. On an adjusted basis, net loss was $9.5 million, or $(0.19) per share.
Triumph’s results included the following:
|
($ millions except EPS) |
|
Pre-tax |
|
|
After-tax |
|
|
EPS |
|
|||
|
Loss from Continuing Operations - GAAP |
|
$ |
(276.5 |
) |
|
$ |
(277.3 |
) |
|
$ |
(5.35 |
) |
|
Impairment of long-lived assets |
|
|
252.4 |
|
|
|
252.4 |
|
|
|
4.87 |
|
|
Restructuring costs (cash) |
|
|
15.4 |
|
|
|
15.4 |
|
|
|
0.30 |
|
|
Adjusted Loss from Continuing Operations - non-GAAP * |
|
$ |
(8.6 |
) |
|
$ |
(9.5 |
) |
|
$ |
(0.19 |
) |
* Differences due to rounding
The number of shares used in computing earnings per share for the first quarter of 2021 was 51.9 million.
Backlog, which represents the next 24 months of actual purchase orders with firm delivery dates or contract requirements, was $2.7 billion, down compared to the prior year period and on a sequential basis due to sunsetting programs and recent production rate reductions, but partially offset by military program increases in Systems & Support.
For the first quarter of fiscal 2021, cash flow used in operations was $(197.5) million, reflecting increasing working capital and liquidation of approximately $10.0 million in prior period advances against current period deliveries.
Outlook
Based on anticipated aircraft production rates and MRO demand, including the impacts of pending program exits and no additional extended shut-down of operations due to the pandemic, the Company expects that net sales for fiscal year 2021 will be approximately $1.8 to $1.9 billion.
The Company anticipates that the trends in cash used in operations that were experienced in the first quarter of fiscal 2021 to continue, but to a lesser degree in the second quarter, and expects it to recover somewhat in the second half of the fiscal year. Therefore, the Company expects cash used in operations and free cash use to be moderately higher for the full fiscal year.
The Company’s outlook excludes the impact of the recent announcements of the sales of our G650 program and our Composite Structures factories and any potential future divestitures.
Conference Call
Triumph will hold a conference call today, August 4th, at 5:30 p.m. (ET) to discuss the first quarter of fiscal year 2021 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, and the presentation has been posted on the Company’s website at http://ir.triumphgroup.com/QuarterlyResults. An audio replay will be available from August 4th to August 11th by calling (855) 859-2056 (Domestic) or (404) 537-3406 (International), passcode #8498495.
About Triumph
Triumph Group, Inc., headquartered in Berwyn, Pennsylvania, designs, engineers, manufactures, repairs and overhauls a broad portfolio of aerospace and defense systems, components and structures. The company serves the global aviation industry, including original equipment manufacturers and the full spectrum of military and commercial aircraft operators.
2
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, 2020.
Widespread health developments, including the recent global coronavirus (COVID-19), and the responses thereto (such as voluntary and in some cases, mandatory quarantines as well as shut downs and other restrictions on travel and commercial, social and other activities) could adversely and materially affect, among other things, the economic and financial markets and labor resources of the countries in which we operate, our manufacturing and supply chain operations, commercial operations and sales force, administrative personnel, third-party service providers, business partners and customers and the demand for our products, which could result in a material adverse effect on our business, financial conditions and results of operations.
FINANCIAL DATA (UNAUDITED) ON FOLLOWING PAGES
3
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(in thousands, except per share data)
|
|
|
|
|
Three Months Ended |
|
|||||||
|
|
|
|
|
June 30, |
|
|||||||
|
CONDENSED STATEMENTS OF OPERATIONS |
|
|
|
|
|
2020 |
|
|
2019 |
|
||
|
Net sales |
|
|
|
|
|
$ |
495,077 |
|
|
$ |
730,231 |
|
|
Cost of sales (excluding depreciation shown below) |
|
|
|
|
|
|
393,843 |
|
|
|
582,233 |
|
|
Selling, general & administrative |
|
|
|
|
|
|
57,203 |
|
|
|
62,337 |
|
|
Depreciation & amortization |
|
|
|
|
|
|
28,602 |
|
|
|
44,050 |
|
|
Impairment of long-lived assets |
|
|
|
|
|
|
252,382 |
|
|
|
— |
|
|
Restructuring costs |
|
|
|
|
|
|
15,439 |
|
|
|
2,964 |
|
|
Loss on sale of assets and businesses, net |
|
|
|
|
|
|
— |
|
|
|
3,136 |
|
|
Operating (loss) income |
|
|
|
|
|
|
(252,392 |
) |
|
|
35,511 |
|
|
Interest expense and other, net |
|
|
|
|
|
|
34,957 |
|
|
|
27,491 |
|
|
Non-service defined benefit income |
|
|
|
|
|
|
(10,888 |
) |
|
|
(14,875 |
) |
|
Income tax expense |
|
|
|
|
|
|
853 |
|
|
|
4,807 |
|
|
Net (loss) Income |
|
|
|
|
|
$ |
(277,314 |
) |
|
$ |
18,088 |
|
|
(Loss) earnings per share - basic: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
|
|
|
|
$ |
(5.35 |
) |
|
$ |
0.36 |
|
|
Weighted average common shares outstanding - basic |
|
|
|
|
|
|
51,860 |
|
|
|
49,854 |
|
|
(Loss) earnings per share - diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
|
|
|
|
$ |
(5.35 |
) |
|
$ |
0.36 |
|
|
Weighted average common shares outstanding - diluted |
|
|
|
|
|
|
51,860 |
|
|
|
50,295 |
|
|
Dividends declared and paid per common share |
|
|
|
|
|
$ |
— |
|
|
$ |
0.04 |
|
4
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except share data)
|
BALANCE SHEETS |
|
Unaudited June 30, 2020 |
|
|
Audited March 31, 2020 |
|
||
|
Assets |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
30,909 |
|
|
$ |
485,463 |
|
|
Accounts receivable, net |
|
|
256,848 |
|
|
|
359,487 |
|
|
Contract assets |
|
|
203,984 |
|
|
|
244,417 |
|
|
Inventory, net |
|
|
467,105 |
|
|
|
452,976 |
|
|
Assets held for sale |
|
|
195,073 |
|
|
|
— |
|
|
Prepaid and other current assets |
|
|
18,708 |
|
|
|
19,289 |
|
|
Current assets |
|
|
1,172,627 |
|
|
|
1,561,632 |
|
|
Property and equipment, net |
|
|
370,820 |
|
|
|
418,141 |
|
|
Goodwill |
|
|
513,392 |
|
|
|
513,527 |
|
|
Intangible assets, net |
|
|
120,928 |
|
|
|
381,968 |
|
|
Other, net |
|
|
88,553 |
|
|
|
105,065 |
|
|
Total assets |
|
$ |
2,266,320 |
|
|
$ |
2,980,333 |
|
|
Liabilities & Stockholders' Deficit |
|
|
|
|
|
|
|
|
|
Current portion of long-term debt |
|
$ |
7,555 |
|
|
$ |
7,336 |
|
|
Accounts payable |
|
|
299,269 |
|
|
|
457,694 |
|
|
Contract liabilities |
|
|
199,463 |
|
|
|
295,320 |
|
|
Accrued expenses |
|
|
199,267 |
|
|
|
227,403 |
|
|
Liabilities related to assets held for sale |
|
|
83,806 |
|
|
|
— |
|
|
Current liabilities |
|
|
789,360 |
|
|
|
987,753 |
|
|
Long-term debt, less current portion |
|
|
1,557,066 |
|
|
|
1,800,171 |
|
|
Accrued pension and post-retirement benefits, noncurrent |
|
|
643,256 |
|
|
|
660,065 |
|
|
Deferred income taxes, noncurrent |
|
|
7,487 |
|
|
|
7,439 |
|
|
Other noncurrent liabilities |
|
|
316,532 |
|
|
|
306,169 |
|
|
Stockholders' Deficit: |
|
|
|
|
|
|
|
|
|
Common stock, $.001 par value, 100,000,000 shares authorized, 52,460,920 and 52,460,920 shares issued |
|
|
52 |
|
|
|
52 |
|
|
Capital in excess of par value |
|
|
796,186 |
|
|
|
804,830 |
|
|
Treasury stock, at cost, 458,710 and 602,831 shares |
|
|
(25,188 |
) |
|
|
(36,217 |
) |
|
Accumulated other comprehensive loss |
|
|
(710,616 |
) |
|
|
(719,428 |
) |
|
Accumulated deficit |
|
|
(1,107,815 |
) |
|
|
(830,501 |
) |
|
Total stockholders' deficit |
|
|
(1,047,381 |
) |
|
|
(781,264 |
) |
|
Total liabilities and stockholders' deficit |
|
$ |
2,266,320 |
|
|
$ |
2,980,333 |
|
5
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except share data)
|
|
|
Three Months Ended June 30, |
|
|||||
|
CASH FLOWS |
|
2020 |
|
|
2019 |
|
||
|
Operating Activities |
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(277,314 |
) |
|
$ |
18,088 |
|
|
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation & amortization |
|
|
28,602 |
|
|
|
44,050 |
|
|
Impairment of long-lived assets |
|
|
252,382 |
|
|
|
— |
|
|
Amortization of acquired contract liabilities |
|
|
(10,987 |
) |
|
|
(16,939 |
) |
|
Loss on sale of assets & businesses, net |
|
|
— |
|
|
|
3,136 |
|
|
Other amortization included in interest expense |
|
|
2,191 |
|
|
|
1,958 |
|
|
Provision for credit losses |
|
|
3,280 |
|
|
|
671 |
|
|
Provision for deferred income taxes |
|
|
— |
|
|
|
3,307 |
|
|
Employee stock-based compensation |
|
|
2,786 |
|
|
|
2,426 |
|
|
Changes in assets and liabilities, excluding the effects of acquisitions/divestitures: |
|
|
|
|
|
|
|
|
|
Trade and other receivables |
|
|
86,004 |
|
|
|
41,247 |
|
|
Contract assets |
|
|
(63,391 |
) |
|
|
2,767 |
|
|
Inventories |
|
|
(33,330 |
) |
|
|
(56,623 |
) |
|
Prepaid expenses and other current assets |
|
|
549 |
|
|
|
12,721 |
|
|
Accounts payable, accrued expenses, and contract liabilities |
|
|
(184,114 |
) |
|
|
(35,426 |
) |
|
Accrued pension and other postretirement benefits |
|
|
(3,526 |
) |
|
|
(15,792 |
) |
|
Other |
|
|
(665 |
) |
|
|
(573 |
) |
|
Net cash (used in) provided by operating activities |
|
|
(197,533 |
) |
|
|
5,018 |
|
|
Investing Activities |
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(7,723 |
) |
|
|
(8,090 |
) |
|
Proceeds from (payments on) sale of assets and businesses |
|
|
792 |
|
|
|
(2,570 |
) |
|
Net cash used in investing activities |
|
|
(6,931 |
) |
|
|
(10,660 |
) |
|
Financing Activities |
|
|
|
|
|
|
|
|
|
Net decrease in revolving credit facility |
|
|
(225,000 |
) |
|
|
(30,000 |
) |
|
Proceeds from issuance of long-term debt and finance leases |
|
|
6,300 |
|
|
|
5,600 |
|
|
Repayment of debt and finance lease obligations |
|
|
(27,468 |
) |
|
|
(30,572 |
) |
|
Payment of deferred financing costs |
|
|
(4,277 |
) |
|
|
(104 |
) |
|
Dividends paid |
|
|
— |
|
|
|
(1,998 |
) |
|
Repurchase of restricted shares for minimum tax obligation |
|
|
(474 |
) |
|
|
(1,043 |
) |
|
Net cash used in financing activities |
|
|
(250,919 |
) |
|
|
(58,117 |
) |
|
Effect of exchange rate changes on cash |
|
|
829 |
|
|
|
(121 |
) |
|
Net change in cash |
|
|
(454,554 |
) |
|
|
(63,880 |
) |
|
Cash and equivalents at beginning of period |
|
|
485,463 |
|
|
|
92,807 |
|
|
Cash and equivalents at end of period |
|
$ |
30,909 |
|
|
$ |
28,927 |
|
6
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
|
|
|
|
|
Three Months Ended |
|
|||||||
|
|
|
|
|
June 30, |
|
|||||||
|
SEGMENT DATA |
|
|
|
|
|
2020 |
|
|
2019 |
|
||
|
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Systems & Support |
|
|
|
|
|
$ |
239,887 |
|
|
$ |
313,606 |
|
|
Aerospace Structures |
|
|
|
|
|
|
257,877 |
|
|
|
419,178 |
|
|
Elimination of inter-segment sales |
|
|
|
|
|
|
(2,687 |
) |
|
|
(2,553 |
) |
|
|
|
|
|
|
|
$ |
495,077 |
|
|
$ |
730,231 |
|
|
Operating (loss) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Systems & Support |
|
|
|
|
|
$ |
25,431 |
|
|
$ |
44,048 |
|
|
Aerospace Structures |
|
|
|
|
|
|
(256,120 |
) |
|
|
12,283 |
|
|
Corporate |
|
|
|
|
|
|
(18,917 |
) |
|
|
(18,394 |
) |
|
Share-based compensation expense |
|
|
|
|
|
|
(2,786 |
) |
|
|
(2,426 |
) |
|
|
|
|
|
|
|
$ |
(252,392 |
) |
|
$ |
35,511 |
|
|
Operating margin % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Systems & Support |
|
|
|
|
|
|
10.6 |
% |
|
|
14.0 |
% |
|
Aerospace Structures |
|
|
|
|
|
|
(99.3 |
%) |
|
|
2.9 |
% |
|
Consolidated |
|
|
|
|
|
|
(51.0 |
%) |
|
|
4.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization^: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Systems & Support |
|
|
|
|
|
$ |
8,356 |
|
|
$ |
8,157 |
|
|
Aerospace Structures |
|
|
|
|
|
|
271,772 |
|
|
|
35,059 |
|
|
Corporate |
|
|
|
|
|
|
856 |
|
|
|
834 |
|
|
|
|
|
|
|
|
$ |
280,984 |
|
|
$ |
44,050 |
|
|
Amortization of acquired contract liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Systems & Support |
|
|
|
|
|
$ |
(3,719 |
) |
|
$ |
(8,125 |
) |
|
Aerospace Structures |
|
|
|
|
|
|
(7,268 |
) |
|
|
(8,814 |
) |
|
|
|
|
|
|
|
$ |
(10,987 |
) |
|
$ |
(16,939 |
) |
|
Capital expenditures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Systems & Support |
|
|
|
|
|
$ |
6,283 |
|
|
$ |
3,884 |
|
|
Aerospace Structures |
|
|
|
|
|
|
1,029 |
|
|
|
3,973 |
|
|
Corporate |
|
|
|
|
|
|
411 |
|
|
|
233 |
|
|
|
|
|
|
|
|
$ |
7,723 |
|
|
$ |
8,090 |
|
|
^ includes long-lived asset impairment charge |
|
|
|
|
|
|
|
|
|
|
|
|
7
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 and Adjusted EBITDAP, which is our net income before interest, income taxes, amortization of acquired contract liabilities, curtailments, settlements and special termination benefits, 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.
We view Adjusted EBITDA and Adjusted EBITDAP as 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 and Adjusted EBITDAP, 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 and Adjusted EBITDAP are not measurements 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 or Adjusted EBITDAP as substitutes 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 and Adjusted EBITDAP 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 and Adjusted EBITDAP.
Adjusted EBITDA and Adjusted EBITDAP 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 20 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 and Adjusted EBITDAP exclude these charges and provide meaningful information about the operating performance of our business, apart from charges for depreciation and amortization. We believe the disclosure of Adjusted EBITDA and Adjusted EBITDAP helps investors meaningfully evaluate and compare our performance from quarter to quarter and from year to year. We also believe Adjusted EBITDA and Adjusted EBITDAP 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 and Adjusted EBITDAP to provide a financial measure by which to compare our operating performance against that of other companies in our industry.
8
Set forth below are descriptions of the financial items that have been excluded from our net income to calculate Adjusted EBITDA and Adjusted EBITDAP 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. |
|
• |
Non-service defined benefit income (inclusive of the adoption of ASU 2017-07 and certain pension related transactions such as curtailments, settlements, early retirement or other incentives) may be useful to investors to consider because they represent the cost of post-retirement benefits to plan participants, net of the assumption of returns on the plan's assets and are not indicative of the cash paid for such benefits. We do not believe these earnings (expenses) 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 (including goodwill and intangible asset 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.
9
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
The following table shows our Adjusted EBITDA and Adjusted EBITDAP reconciled to our net income for the indicated periods (in thousands):
|
|
|
|
|
Three Months Ended |
|
|||||||
|
|
|
|
|
June 30, |
|
|||||||
|
Adjusted Earnings before Interest, Taxes, Depreciation, Amortization, and Pension (Adjusted EBITDAP): |
|
|
|
|
|
2020 |
|
|
2019 |
|
||
|
Net (loss) income |
|
|
|
|
|
$ |
(277,314 |
) |
|
$ |
18,088 |
|
|
Add-back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
|
|
|
|
853 |
|
|
|
4,807 |
|
|
Interest expense and other, net |
|
|
|
|
|
|
34,957 |
|
|
|
27,491 |
|
|
Loss on sales of assets and businesses, net |
|
|
|
|
|
|
— |
|
|
|
3,136 |
|
|
Amortization of acquired contract liabilities |
|
|
|
|
|
|
(10,987 |
) |
|
|
(16,939 |
) |
|
Depreciation and amortization^ |
|
|
|
|
|
|
280,984 |
|
|
|
44,050 |
|
|
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") |
|
|
|
|
|
$ |
28,493 |
|
|
$ |
80,633 |
|
|
Non-service defined benefit income (excluding settlements) |
|
|
|
|
|
|
(10,888 |
) |
|
|
(14,875 |
) |
|
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization, and Pension ("Adjusted EBITDAP") |
|
|
|
|
|
$ |
17,605 |
|
|
$ |
65,758 |
|
|
Net sales |
|
|
|
|
|
$ |
495,077 |
|
|
$ |
730,231 |
|
|
Net (loss) income margin |
|
|
|
|
|
|
(56.0 |
%) |
|
|
2.5 |
% |
|
Adjusted EBITDAP margin |
|
|
|
|
|
|
3.6 |
% |
|
|
9.2 |
% |
|
^ includes long-lived asset impairment charge |
|
|
|
|
|
|
|
|
|
|
|
|
10
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
|
|
|
Three Months Ended June 30, 2020 |
|
|||||||||||||
|
|
|
|
|
|
|
Segment Data |
|
|||||||||
|
Adjusted Earnings before Interest, Taxes, Depreciation, Amortization, and Pension (EBITDAP): |
|
Total |
|
|
Systems & Support |
|
|
Aerospace Structures |
|
|
Corporate/ Eliminations* |
|
||||
|
Net loss |
|
$ |
(277,314 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Add-back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-service defined benefit income |
|
|
(10,888 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
853 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense and other, net |
|
|
34,957 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
$ |
(252,392 |
) |
|
$ |
25,431 |
|
|
$ |
(256,120 |
) |
|
$ |
(21,703 |
) |
|
Amortization of acquired contract liabilities |
|
|
(10,987 |
) |
|
|
(3,719 |
) |
|
|
(7,268 |
) |
|
|
— |
|
|
Depreciation and amortization |
|
|
280,984 |
|
|
|
8,356 |
|
|
|
271,772 |
|
|
|
856 |
|
|
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization, and Pension ("Adjusted EBITDAP") |
|
$ |
17,605 |
|
|
$ |
30,068 |
|
|
$ |
8,384 |
|
|
$ |
(20,847 |
) |
|
Net sales |
|
$ |
495,077 |
|
|
$ |
239,887 |
|
|
$ |
257,877 |
|
|
$ |
(2,687 |
) |
|
Adjusted EBITDAP margin |
|
|
3.6 |
% |
|
|
12.7 |
% |
|
|
3.3 |
% |
|
n/a |
|
|
|
|
|
Three Months Ended June 30, 2019 |
|
|||||||||||||
|
|
|
|
|
|
|
Segment Data |
|
|||||||||
|
Adjusted Earnings before Interest, Taxes, Depreciation, Amortization, and Pension (EBITDAP): |
|
Total |
|
|
Systems & Support |
|
|
Aerospace Structures |
|
|
Corporate/ Eliminations* |
|
||||
|
Net income |
|
$ |
18,088 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add-back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-service defined benefit income |
|
|
(14,875 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
4,807 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense and other, net |
|
|
27,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income |
|
$ |
35,511 |
|
|
$ |
44,048 |
|
|
$ |
12,283 |
|
|
$ |
(20,820 |
) |
|
Loss on sales of assets & businesses, net |
|
|
3,136 |
|
|
|
— |
|
|
|
— |
|
|
|
3,136 |
|
|
Amortization of acquired contract liabilities |
|
|
(16,939 |
) |
|
|
(8,125 |
) |
|
|
(8,814 |
) |
|
|
— |
|
|
Depreciation and amortization |
|
|
44,050 |
|
|
|
8,157 |
|
|
|
35,059 |
|
|
|
834 |
|
|
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization, and Pension ("Adjusted EBITDAP") |
|
$ |
65,758 |
|
|
$ |
44,080 |
|
|
$ |
38,528 |
|
|
$ |
(16,850 |
) |
|
Net sales |
|
$ |
730,231 |
|
|
$ |
313,606 |
|
|
$ |
419,178 |
|
|
$ |
(2,553 |
) |
|
Adjusted EBITDAP margin |
|
|
9.2 |
% |
|
|
14.4 |
% |
|
|
9.4 |
% |
|
n/a |
|
|
*Operating loss at Corporate includes share-based compensation expense.
11
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except per share data)
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 have 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 June 30, 2020 |
|
|||||||||
|
|
|
Pre-Tax |
|
|
After-Tax |
|
|
EPS |
|
|||
|
Loss from continuing operations - GAAP |
|
$ |
(276,461 |
) |
|
$ |
(277,314 |
) |
|
$ |
(5.35 |
) |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of long-lived assets |
|
|
252,382 |
|
|
|
252,382 |
|
|
|
4.87 |
|
|
Restructuring costs |
|
|
15,439 |
|
|
|
15,439 |
|
|
|
0.30 |
|
|
Adjusted loss from continuing operations - non-GAAP* |
|
$ |
(8,640 |
) |
|
$ |
(9,493 |
) |
|
$ |
(0.19 |
) |
|
* Differences due to rounding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2019 |
|
|||||||||
|
|
|
Pre-Tax |
|
|
After-Tax |
|
|
Diluted EPS |
|
|||
|
Income from continuing operations - GAAP |
|
$ |
22,895 |
|
|
$ |
18,088 |
|
|
$ |
0.36 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on sale of assets and businesses, net |
|
|
3,136 |
|
|
|
2,477 |
|
|
|
0.05 |
|
|
Restructuring costs |
|
|
2,964 |
|
|
|
2,342 |
|
|
|
0.05 |
|
|
Adjusted income from continuing operations - non-GAAP* |
|
$ |
28,995 |
|
|
$ |
22,907 |
|
|
$ |
0.46 |
|
|
* Differences due to rounding |
|
|
|
|
|
|
|
|
|
|
|
|
12
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except per share data)
Non-GAAP Financial Measure Disclosures (continued)
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 June 30, |
|
|||||||
|
|
|
|
|
|
|
2020 |
|
|
2019 |
|
||
|
Operating (loss) income - GAAP |
|
|
|
|
|
$ |
(252,392 |
) |
|
$ |
35,511 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on sale of assets and businesses, net |
|
|
|
|
|
|
— |
|
|
|
3,136 |
|
|
Impairment of long-lived assets |
|
|
|
|
|
|
252,382 |
|
|
|
— |
|
|
Restructuring costs |
|
|
|
|
|
|
15,439 |
|
|
|
2,964 |
|
|
Adjusted operating income - non-GAAP |
|
|
|
|
|
$ |
15,429 |
|
|
$ |
41,611 |
|
|
Adjusted operating margin |
|
|
|
|
|
|
3.1 |
% |
|
|
5.7 |
% |
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 June 30, |
|
|||||||
|
|
|
|
|
|
|
2020 |
|
|
2019 |
|
||
|
Cash flow provided by (used in) operations |
|
|
|
|
|
$ |
(197,533 |
) |
|
$ |
5,018 |
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
|
|
|
|
(7,723 |
) |
|
|
(8,090 |
) |
|
Free cash flow (use) |
|
|
|
|
|
$ |
(205,256 |
) |
|
$ |
(3,072 |
) |
13