- Net sales for third quarter fiscal year
2015 increased to $917.4 million
- Operating loss for third quarter fiscal
year 2015 was ($61.3) million and included a pre-tax charge of
$152.0 million for forward losses associated with the 747-8 program
through the duration of the contract
- Net loss per share for third quarter
fiscal year 2015 was ($0.79), which included certain items
described below totaling ($2.20) per diluted share. Excluding these
items, net income was $72.1 million and earnings per share were
$1.42 per diluted share
- Year-to-date cash flow from operations
before pension contributions of $55.9 million was $365.9
million
- Successfully completed agreement to
assume production of Gulfstream G650 and G280 wing programs
Triumph Group, Inc. (NYSE: TGI) today reported
financial results for its third quarter of fiscal year 2015, which
ended December 31, 2014.
“During the third quarter, we continued to extend Triumph’s core
capabilities in complex aerostructures with the assumption of the
Gulfstream G650 and G280 wing programs and we are pleased with the
progress of the transition to date,” said Jeffry D. Frisby,
Triumph’s President and Chief Executive Officer. “In addition, our
Aerospace Systems Group and Aftermarket Services Group continued to
perform well, delivering positive organic revenue growth and
sustaining their strong operating margins. We generated strong cash
flow during the quarter, enabling us to reduce our debt and
opportunistically buy back shares to return capital to our
shareholders and we remain focused on driving value through
enhanced execution, identifying efficiencies and pursuing strategic
growth opportunities.”
“Following Boeing’s recent 747-8 rate cut announcement, we
conducted an in-depth review of our assumptions for the program
through the end of the contract and recorded a one-time charge in
the fiscal third quarter to account for forward losses. The charges
are a prudent measure that considers, among other factors, lower
expected build rates as well as higher actual and forecasted costs
than originally targeted for the duration of our contract.
Notwithstanding this decision, we will continue to take actions to
reduce costs and enhance performance on the 747-8 program.”
Net sales for the fiscal third quarter of 2015 were $917.4
million, up from fiscal third quarter 2014 net sales of $915.8
million. Organic sales for the quarter decreased seven percent
primarily due to decreased production on the C-17 program and lower
non-recurring revenue. Net loss for the third quarter of fiscal
year 2015 was ($39.8) million, or ($0.79) per share, compared to
$35.4 million, or $0.67 per diluted share, for the third quarter of
the prior fiscal year.
Results in the third quarter of fiscal year 2015 included
charges in the Aerostructures segment of $169.2 million pre-tax, or
($2.16) per diluted share, as detailed in the segment results
discussion below. The majority of these costs were related to a
forward loss charge of $152.0 million pre-tax, or ($1.94) per
diluted share, associated with the 747-8 program to cover the
duration of the contract. In addition, operating results for the
quarter included $3.5 million pre-tax, or ($0.04) per diluted
share, of transaction fees related to the assumption of the
Gulfstream G650 and G280 wing programs. Excluding these items,
earnings per share for the third quarter of fiscal year 2015 were
$1.42 per diluted share. Excluding non-recurring items, earnings
per share for the prior fiscal year’s third quarter were
$0.99 per diluted share. The number of shares used in
computing diluted earnings per share on an adjusted basis for the
quarter was 50.8 million shares.
Net sales for the first nine months of fiscal year 2015 were
$2.808 billion, down slightly from net sales of $2.827 billion for
the comparable period of the last fiscal year. Net income for the
nine months of fiscal year 2015 was $155.9 million, or $3.04 per
diluted share, versus $164.0 million, or $3.11 per diluted
share, in the prior year period. In addition to the third quarter
charges totaling $172.7 million pre-tax described above, the
year-to-date results included the first two quarters of fiscal year
2015 costs related to the Red Oak facility transition, the
refinancing of the Senior Notes due 2018 and a gain, net of legal
fees, related to the settlement of the Eaton litigation. Excluding
these items, net income for the first nine months of fiscal year
2015 was $206.6 million, or $4.02 per diluted share.
During the nine months ended December 31, 2014, the company
generated $365.9 million of cash flow from operations before
pension contributions of $55.9 million; after these contributions,
cash flow from operations was $310.0 million.
During the quarter, the company repurchased 336,271 shares of
stock under the company’s existing 5.5 million share repurchase
authorization. As of December 31, 2014, approximately 3.5 million
shares remained under the share repurchase authorization.
Segment Results
Aerostructures
The Aerostructures segment reported net sales of $559.5 million
in the third quarter of fiscal year 2015 compared to $637.2 million
in the prior year period. Organic sales for the quarter declined
eleven percent primarily due to decreased production on the C-17
program and lower non-recurring revenue. Operating loss for the
third quarter of fiscal year 2015 was ($102.5) million, compared to
operating income of $54.0 million for the prior year period, and
included a net unfavorable cumulative catch-up adjustment on
long-term contracts of $2.1 million. Excluding the 747-8 program,
there was a net favorable cumulative catch-up adjustment of $0.9
million. Operating results for the quarter included a one-time
$152.0 million pre-tax charge for forward losses and a $3.0 million
unfavorable cumulative catch-up adjustment associated with the
747-8 program. The forward loss charges reflect anticipated
production rate cuts through the duration of the contract, which
extends into fiscal year 2019, and revised cost estimates due to
higher actual and forecasted costs, including the impact of the new
mortality tables on the pension obligations. Also included in
operating results were $3.3 million of costs related to the Red Oak
facility transition as well as $13.9 million of charges related to
lower than expected performance at Triumph Structures-
International. Excluding these items, the segment’s operating
margin for the quarter was 16 percent.
Aerospace Systems
The Aerospace Systems segment reported net sales of $279.2
million in the third quarter of fiscal year 2015 compared to $211.4
million in the prior year period, an increase of thirty-two
percent, reflecting the impact of the Triumph Actuation
Systems-Yakima and Triumph Actuation Systems-UK and IOM
acquisitions completed at the end of the first quarter of fiscal
year 2015. Organic sales growth for the quarter was two percent.
Operating income for the third quarter of fiscal year 2015 was
$41.9 million compared to $32.5 million for the prior year period,
an increase of twenty-nine percent, reflecting an operating margin
of fifteen percent. Organic operating margin for the quarter was
sixteen percent as compared to fifteen percent for the prior year
period.
Aftermarket Services
The Aftermarket Services segment reported net sales in the third
quarter of fiscal year 2015 of $80.7 million compared to $69.6
million in the prior year period, an increase of sixteen percent,
reflecting the impact of the Triumph Aviation Services-NAAS
Division acquisition completed early in the third quarter of fiscal
year 2015. Organic sales growth for the quarter was seven percent.
Operating income for the third quarter of fiscal year 2015 was
$12.5 million compared to $9.3 million for the prior year period,
an increase of thirty-four percent, reflecting an operating margin
of sixteen percent.
Outlook
Mr. Frisby continued, “We took important steps during the
quarter to significantly reduce the risk on the future performance
of our 747-8 program and to extend our core capabilities to drive
growth and value to our shareholders. Completing the transfer of
the Gulfstream G650 and G280 wing programs was an important
milestone that enhances our leadership position in that sector. We
believe that we are well positioned in our end markets and are
committed to leveraging the strength of our portfolio to drive
growth.”
Based on current projected aircraft production rates, the
company now expects revenue for fiscal year 2015 to be
approximately $3.9 billion and earnings per share for the fourth
quarter fiscal 2015 to be approximately $1.70, excluding Red Oak
facility transition costs and based on a weighted average share
count of 50.6 million shares. The company updated its expectation
for Adjusted EBITDA for the fourth quarter fiscal 2015 to be
approximately $165.0 million, which excludes the Red Oak facility
transition costs, and expects to generate free cash flow available
for debt reduction, acquisitions and share repurchases after
pension contributions for the fiscal year of approximately $300.0
million.
Conference Call
Triumph Group will hold a conference call tomorrow, January 29
at 8:30 a.m. (ET) to discuss the fiscal year 2015 third quarter
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 January
29th to February 5th by calling (888) 266-2081 (Domestic) or
(703) 925-2533 (International), passcode #1650287.
About Triumph Group
Triumph Group, Inc., headquartered in Berwyn, Pennsylvania,
designs, engineers, manufactures, repairs and overhauls a broad
portfolio of aerostructures, aircraft 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.
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 future aerospace market
conditions, aircraft production rates, financial and operational
performance, revenue and earnings growth, cash flow, profitability
and earnings results for fiscal year 2015. 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, 2014.
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES (in
thousands, except per share data) Three Months
Ended Nine Months Ended December 31, December
31, CONDENSED STATEMENTS OF OPERATIONS
2014 2013 2014 2013 Net
sales $ 917,417 $ 915,816 $ 2,808,444 $ 2,826,844 Operating
(loss) income (61,266 ) 84,779 293,956 319,096 Interest
expense and other 13,573 30,115 71,320 70,146 Income tax (benefit)
expense (35,007 ) 19,271 66,778 84,998
Net (loss) income $ (39,832 ) $ 35,393 $ 155,858 $ 163,952
Earnings per share - basic: Net (loss) income $ (0.79
) $ 0.68 $ 3.05 $ 3.18 Weighted average common shares
outstanding - basic 50,643 52,024
51,130 51,548 Earnings per share - diluted:
Net (loss) income $ (0.79 ) $ 0.67 $ 3.04 $ 3.11 Weighted
average common shares outstanding - diluted 50,643
52,806 51,343 52,798 Dividends declared
and paid per common share $ 0.04 $ 0.04 $ 0.12 $ 0.12
FINANCIAL DATA (UNAUDITED) TRIUMPH
GROUP, INC. AND SUBSIDIARIES (dollars in thousands, except
per share data) BALANCE SHEET Unaudited
Audited December 31, March 31, 2014
2014 Assets Cash and cash equivalents $ 34,181 $
28,998 Accounts receivable, net 448,892 517,304 Inventory, net of
unliquidated progress payments of $174,855 and $165,019 1,288,564
1,111,767 Rotable assets 43,825 41,666 Deferred income taxes 49,429
57,308 Prepaid and other current assets 22,789
24,897 Current assets 1,887,680 1,781,940 Property
and equipment, net 982,666 931,430 Goodwill 2,133,879 1,791,891
Intangible assets, net 974,028 978,171 Other, net 48,745
69,954 Total assets $ 6,026,998
$ 5,553,386
Liabilities & Stockholders'
Equity Current portion of long-term debt $ 40,877 $
49,575 Accounts payable 308,398 317,334 Accrued expenses
334,135 273,290 Current liabilities 683,410
640,199 Long-term debt, less current portion 1,401,803
1,500,808 Accrued pension and post-retirement benefits, noncurrent
410,168 508,524 Deferred income taxes, noncurrent 434,839 385,188
Other noncurrent liabilities 826,326 234,756 Stockholders'
Equity:
Common stock, $.001 par value, 100,000,000
shares authorized, 50,451,397 and 52,459,020 shares issued
51 52 Capital in excess of par value 850,542 866,281 Treasury
stock, at cost, 2,009,523 and 300,000 shares (133,767 ) (19,134 )
Accumulated other comprehensive loss (51,730 ) (18,908 ) Retained
earnings 1,605,356 1,455,620 Total
stockholders' equity 2,270,452 2,283,911
Total liabilities and stockholders' equity $
6,026,998 $ 5,553,386
FINANCIAL DATA (UNAUDITED) TRIUMPH GROUP,
INC. AND SUBSIDIARIES (dollars in thousands)
SEGMENT DATA Three Months Ended Nine
Months Ended December 31, December 31,
2014 2013 2014 2013 Net sales:
Aerostructures $ 559,465 $ 637,202 $ 1,803,400 $ 1,979,838
Aerospace Systems 279,198 211,402 787,951 636,411 Aftermarket
Services 80,690 69,556 222,641 216,880 Elimination of inter-segment
sales (1,936 ) (2,344 ) (5,548 ) (6,285
) $ 917,417 $ 915,816 $ 2,808,444 $ 2,826,844
Operating income (loss): Aerostructures $ (102,461 )
$ 53,973 $ 40,634 $ 218,784 Aerospace Systems 41,863 32,504 125,430
106,887 Aftermarket Services 12,490 9,297 34,614 30,678 Corporate
(13,158 ) (10,995 ) 93,278
(37,253 ) $ (61,266 ) $ 84,779 $ 293,956 $ 319,096
Depreciation and amortization: Aerostructures $
24,947 $ 30,207 $ 74,692 $ 83,002 Aerospace Systems 11,363 10,823
32,027 27,911 Aftermarket Services 2,334 1,862 6,137 5,603
Corporate 1,164 1,211 3,517
3,765 $ 39,808 $ 44,103 $
116,373 $ 120,281 Amortization of acquired
contract liabilities: Aerostructures $ (4,411 ) $ (8,380 ) $
(14,311 ) $ (20,135 ) Aerospace Systems (11,090 )
(5,878 ) (25,021 ) (14,238 ) $ (15,501 ) $ (14,258 )
$ (39,332 ) $ (34,373 ) Capital expenditures: Aerostructures
$ 15,589 $ 33,662 $ 53,965 $ 132,205 Aerospace Systems 8,301 5,714
24,552 15,989 Aftermarket Services 1,392 2,728 5,425 10,795
Corporate 814 429 1,228
2,808 $ 26,096 $ 42,533 $ 85,170
$ 161,797
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:
- 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.
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
- 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.
Modified Adjusted EBITDA is included to adjust for the impacts
of our recent relocation from our Jefferson Street Facility and our
provision for forward losses on our 747-8 long-term contract, in
order to show the more comparable results period to period.
The following table shows our Adjusted EBITDA and Modified
Adjusted EBITDA reconciled to our net income for the indicated
periods (in thousands):
Three Months Ended Nine Months Ended
December 31, December 31, 2014
2013 2014 2013 Adjusted Earnings
before Interest, Taxes, Depreciation and Amortization (EBITDA):
Net (Loss) Income $ (39,832 ) $ 35,393 $ 155,858 $ 163,952
Add-back: Income Tax Expense (35,007 ) 19,271 66,778 84,998
Interest Expense and Other 13,573 30,115 71,320 70,146
Curtailments, Settlements and Early Retirement Incentives - 1,561 -
1,561 Gain on Legal Settlement, net - - (134,693 ) - Amortization
of Acquired Contract Liabilities (15,501 ) (14,258 ) (39,332 )
(34,373 ) Depreciation and Amortization 39,808
44,103 116,373 120,281
Adjusted Earnings before Interest, Taxes,
Depreciation and Amortization ("Adjusted EBITDA")
$ (36,959 ) $ 116,185 $ 236,304 $ 406,565
747-8 forward loss $ 151,992 $ - $ 151,992 $ - Jefferson
Street Move costs 2,124 9,925
14,058 14,198 Modified Adjusted EBITDA $
117,157 $ 126,110 $ 402,354 $ 420,763
Net Sales $ 917,417 $ 915,816 $ 2,808,444
$ 2,826,844 Adjusted EBITDA Margin -4.1
% 12.9 % 8.5 % 14.6 % Modified Adjusted
EBITDA Margin 13.0 % 14.0 % 14.5 % 15.1
%
FINANCIAL DATA
(UNAUDITED) TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands) Non-GAAP Financial Measure
Disclosures (continued) Adjusted Earnings before
Interest, Taxes, Depreciation and Amortization (EBITDA):
Three Months Ended December 31, 2014 Segment Data
Aerospace
Aftermarket
Corporate
/
Total
Aerostructures
Systems
Services
Eliminations
Net Loss $ (39,832 ) Add-back: Income Tax Expense
(35,007 ) Interest Expense and Other
13,573
Operating (Loss) Income $ (61,266 ) $ (102,461 ) $
41,863 $ 12,490 $ (13,158 ) Amortization of Acquired
Contract Liabilities (15,501 ) (4,411 ) (11,090 ) - - Depreciation
and Amortization
39,808
24,947 11,363
2,334 1,164
Adjusted Earnings (Losses) before
Interest, Taxes, Depreciation and Amortization ("Adjusted
EBITDA")
$ (36,959 ) $
(81,925 ) $
42,136 $ 14,824
$ (11,994 )
747-8 forward loss $ 151,992 $ 151,992 $ - $ - $ - Jefferson Street
Move costs
2,124
2,124 -
- - Modified
Adjusted EBITDA
$ 117,157
$ 72,191 $
42,136 $ 14,824
$ (11,994 )
Net Sales
$ 917,417 $
559,465 $ 279,198
$ 80,690 $
(1,936 ) Adjusted EBITDA Margin
-4.1 % -14.8
% 15.7 %
18.4 % n/a
Modified Adjusted EBITDA Margin
13.0
% 13.0 %
15.7 % 18.4
% n/a Adjusted
Earnings before Interest, Taxes, Depreciation and Amortization
(EBITDA): Nine Months Ended December 31, 2014 Segment
Data
Aerospace
Aftermarket
Corporate
/
Total
Aerostructures
Systems
Services
Eliminations
Net Income $ 155,858 Add-back: Income Tax Expense
66,778 Interest Expense and Other
71,320
Operating Income (Loss) $ 293,956 $ 40,634 $ 125,430 $
34,614 $ 93,278 Gain on Legal Settlement (134,693 ) - - -
(134,693 ) Amortization of Acquired Contract Liabilities (39,332 )
(14,311 ) (25,021 ) - - Depreciation and Amortization
116,373 74,692
32,027 6,137
3,517
Adjusted Earnings (Losses) before
Interest, Taxes, Depreciation and Amortization ("Adjusted
EBITDA")
$ 236,304 $
101,015 $ 132,436
$ 40,751 $
(37,898 ) 747-8 forward loss $
151,992 $ 151,992 $ - $ - $ - Jefferson Street Move costs
14,058 14,058
- -
- Modified Adjusted EBITDA
$
402,354 $ 267,065
$ 132,436 $
40,751 $ (37,898
) Net Sales
$
2,808,444 $ 1,803,400
$ 787,951 $
222,641 $ (5,548
) Adjusted EBITDA Margin
8.5 % 5.6
% 17.4 %
18.3 % n/a
Modified Adjusted EBITDA Margin
14.5
% 14.9 %
17.4 % 18.3
% n/a
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES (dollars in
thousands) Non-GAAP Financial Measure Disclosures
(continued) Adjusted Earnings before Interest, Taxes,
Depreciation and Amortization (EBITDA): Three Months Ended
December 31, 2013 Segment Data
Aerospace
Aftermarket
Corporate
/
Total
Aerostructures
Systems
Services
Eliminations
Net Income $ 35,393 Add-back: Income Tax Expense
19,271 Interest Expense and Other
30,115
Operating Income (Loss) $ 84,779 $ 53,973 $ 32,504 $ 9,297 $
(10,995 ) Pension Settlement Charge 1,561 - - - 1,561
Amortization of Acquired Contract Liabilities (14,258 ) (8,380 )
(5,878 ) - - Depreciation and Amortization
44,103 30,207
10,823 1,862
1,211
Adjusted Earnings (Losses) before
Interest, Taxes, Depreciation and Amortization ("Adjusted
EBITDA")
$ 116,185 $
75,800 $ 37,449
$ 11,159 $
(8,223 ) Jefferson Street Move
costs
$ 9,925 $
9,925 $ -
$ - $ -
Modified Adjusted EBITDA
$ 126,110
$ 85,725 $
37,449 $ 11,159
$ (8,223 ) Net
Sales
$ 915,816 $
637,202 $ 211,402
$ 69,556 $
(2,344 ) Adjusted EBITDA Margin
12.9 % 12.1
% 18.2 %
16.0 % n/a
Modified Adjusted EBITDA Margin
14.0
% 13.6 %
18.2 % 16.0
% n/a
Adjusted Earnings before Interest, Taxes, Depreciation and
Amortization (EBITDA): Nine Months Ended December 31,
2013 Segment Data
Aerospace
Aftermarket
Corporate
/
Total
Aerostructures
Systems
Services
Eliminations
Net Income $ 163,952 Add-back: Income Tax Expense
84,998 Interest Expense and Other
70,146
Operating Income (Loss) $ 319,096 $ 218,784 $ 106,887 $
30,678 $ (37,253 ) Pension Settlement Charge 1,561 - - -
1,561 Amortization of Acquired Contract Liabilities (34,373 )
(20,135 ) (14,238 ) - - Depreciation and Amortization
120,281 83,002
27,911 5,603
3,765
Adjusted Earnings (Losses) before
Interest, Taxes, Depreciation and Amortization ("Adjusted
EBITDA")
$ 406,565 $
281,651 $ 120,560
$ 36,281 $
(31,927 ) Jefferson Street Move
costs
$ 14,198 $
14,198 $ -
$ - $ -
Modified Adjusted EBITDA
$ 420,763
$ 295,849 $
120,560 $ 36,281
$ (31,927 )
Net Sales
$ 2,826,844
$ 1,979,838 $
636,411 $ 216,880
$ (6,285 )
Adjusted EBITDA Margin
14.6 %
14.4 % 19.4
% 16.7 %
n/a Modified Adjusted EBITDA Margin
15.1 % 15.1
% 19.4 %
16.7 % n/a
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND
SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Adjusted income from continuing operations before income taxes,
adjusted income from continuing operations and adjusted income from
continuing operations diluted per share, before non-recurring costs
has been provided for consistency and comparability. These measures
should not be considered in isolation or as alternatives to income
from continuing operations before income taxes, income from
continuing operations and income from continuing operations per
diluted share presented in accordance with GAAP. The following
table reconciles income from continuing operations before income
taxes, income from continuing operations and income from continuing
operations per diluted share, before non-recurring costs.
Three Months Ended
December 31,
2014
Pre-tax
After-tax
Diluted
EPS
Location
on
Financial
Statements
Loss from Continuing Operations- GAAP $ (74,839 ) $ (39,832 ) $
(0.79 )
Adjustments: 747-8 forward loss 151,992 98,491 1.94
Aerostructures (EAC) ** Structures - International 13,919 9,020
0.18 Aerostructures Transaction fees - Tulsa Acquisition 3,507
2,273 0.04 Corporate Jefferson Street Move: Disruption 2,124 1,376
0.03 Aerostructures (EAC) ** Accelerated Depreciation 1,174
761 0.01 Aerostructures
(EAC) ** Adjusted Income from Continuing Operations-
non-GAAP $ 97,877 $ 72,089 $ 1.42*
Nine Months Ended
December 31,
2014
Pre-tax
After-tax
Diluted
EPS
Location
on
Financial
Statements
Income from Continuing Operations- GAAP $ 222,636 $ 155,858 $ 3.04
Adjustments: Gain on Legal Settlement (134,693 ) (87,281 )
(1.70 ) Corporate Refinancing Costs 22,615 14,655 0.29 Transaction
fees - Tulsa Acquisition 4,606 2,985 0.06 Corporate 747-8 forward
loss 151,992 98,491 1.92 Aerostructures (EAC) ** Structures -
International 13,919 9,020 0.18 Aerostructures Relocation Costs
3,193 2,069 0.04 Aerostructures Jefferson Street Move: Disruption
10,865 7,041 0.14 Aerostructures (EAC) ** Accelerated Depreciation
5,801 3,759 0.07
Aerostructures (EAC) ** Adjusted Income from Continuing
Operations- non-GAAP $ 300,934 $ 206,597 $
4.02 * 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"
FINANCIAL DATA
(UNAUDITED) TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands) Non-GAAP Financial Measure
Disclosures (continued) Three Months Ended
December 31,
2013
Pre-tax
After-tax
Diluted
EPS
Location
on
Financial
Statements
Income from Continuing Operations- GAAP $ 54,664 $ 35,393 $ 0.67
Adjustments: Pension settlement charge 1,561 1,008 0.02
Corporate Refinancing fees 11,069 7,151 0.14 Corporate Relocation
Costs (including interest) 5,041 3,256 0.06 Aerostructures
(Primarily) Jefferson Street Move: Disruption 5,084 3,284 0.06
Aerostructures (EAC) ** Accelerated Depreciation 3,224
2,083 0.04 Aerostructures (EAC) **
Adjusted Income from Continuing Operations- non-GAAP $ 80,643
$ 52,175 $ 0.99
Nine Months Ended
December 31,
2013
Pre-tax
After-tax
Diluted
EPS
Location
on
Financial
Statements
Income from Continuing Operations- GAAP $ 248,950 $ 163,952 $ 3.11
Adjustments: Pension settlement charge 1,561 1,008 0.02
Corporate Refinancing fees 11,069 7,151 0.14 Corporate Relocation
Costs (including interest) 7,786 5,030 0.10 Aerostructures
(Primarily) Jefferson Street Move: Disruption 6,913 4,466 0.08
Aerostructures (EAC) ** Accelerated Depreciation 8,033
5,189 0.10 Aerostructures (EAC) **
Adjusted Income from Continuing Operations- non-GAAP $ 284,312
$ 186,796 $ 3.54* * Difference due to
rounding.
* *
EAC- estimated costs at completion with
respect to contracts within the scope of Accounting Standards
Codification 605-35, "Revenue Recognition-Construction-Type and
Production-Type Contracts"
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.
Nine Months Ended December 31, 2014
2013 Cash flow from operations, before pension
contributions $ 365,919 $ 79,142 Pension contributions
55,955 45,800 Cash provided by operations
309,964 33,342 Less: Capital expenditures 85,170 161,797 Dividends
6,122 6,246
Free cash flow available for debt
reduction, acquisitions and share repurchases
$ 218,672 $ (134,701 ) We use "Net Debt to Capital"
as a measure of financial leverage. The following table sets forth
the computation of Net Debt to Capital:
December 31,
March 31, 2014 2014
Calculation of
Net Debt
Current portion $ 40,877 $ 49,575 Long-term debt 1,401,803
1,500,808 Total debt 1,442,680 1,550,383 Less:
Cash 34,181 28,998 Net debt $ 1,408,499
$ 1,521,385
Calculation of
Capital
Net debt $ 1,408,499 $ 1,521,385 Stockholders' equity
2,270,452 2,283,911 Total capital $ 3,678,951
$ 3,805,296 Percent of net debt to capital
38.3 % 40.0 %
Triumph Group, Inc.Sheila G. SpagnoloVice President, Tax &
Investor Relations610-251-1000sspagnolo@triumphgroup.com
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