PROVIDES FISCAL YEAR 2024 GUIDANCE
RADNOR, Pa., May 17, 2023 /PRNewswire/ — Triumph Group, Inc. (NYSE: TGI) (“TRIUMPH” or the “Company”) today reported financial results for its fourth quarter and fiscal 2023, which ended March 31, 2023.
Fourth Quarter Fiscal 2023
- Net sales of $393.3 million
- Operating income of $56.2 million with operating margin of 14%; adjusted operating income of $59.9 million with adjusted operating margin of 15%
- Net loss of ($17.5) million, or ($0.27) per share; adjusted net income of $34.5 million, or $0.39 per diluted share
- Adjusted EBITDAP of $68.1 million with Adjusted EBITDAP margin of 17.3%
- Cash flow generated from operations of $60.0 million; free cash flow of $51.8 million
Fiscal 2023
- Net sales of $1.38 billion
- Operating income of $238.1 million with operating margin of 17%, including $101.5 million gain on sale from our Stuart, Florida business; adjusted operating income of $158.7 million with adjusted operating margin of 11%
- Net income of $89.6 million, or $1.20 per diluted share; adjusted net income of $55.4 million, or $0.77 per diluted share
- Adjusted EBITDAP of $195.7 million with Adjusted EBITDAP margin of 14.0%
- Cash flow used in operations of ($52.3) million; free cash use of ($72.9) million
- Proactively addressed near term maturities through new $1.2 billion first lien secured financing
Fiscal 2024 Guidance
- Net sales of $1.39 billion to $1.43 billion, reflecting 7 – 10% organic growth
- Operating income of $165.0 million to $180.0 million, reflecting operating income margin of 12 – 16%
- Adjusted EBITDAP of $210.0 million to $225.0 million, reflecting Adjusted EBITDAP margin of 15 – 16%
- Cash flow from operations of $60.0 million to $80.0 million; free cash flow of $35.0 million to $50.0 million
“TRIUMPH ended our fiscal year 2023 on an upswing and exceeded both our Net Sales and our adjusted earnings per share guidance and successfully extending our debt maturities to enhance liquidity and financial flexibility,” said Dan Crowley, TRIUMPH’s chairman, president, and chief executive officer. “As our markets improve, we generated 21% organic sales growth from continuing operations in the quarter as a result of increasing commercial OEM production rates, accelerating MRO demand, and recovering military volumes. In addition, we delivered strong cash generation for the quarter and improved profitability on a year over year basis as supply chain constraints eased.”
Mr. Crowley continued, “As a result of our healthy backlog and recent wins, we anticipate organic growth of 7 – 10% as well as continued margin expansion and positive free cash flow generation in fiscal 2024. We will also maintain our focus on deleveraging and optimizing our capital structure over time. As we execute on our financial and operational goals, TRIUMPH remains on track to deliver profitable growth and enhance shareholder value.”
Fourth Quarter and Full Year Fiscal 2023 Overview
|
Three Months Ended March 31, |
Year Ended March 31, |
|||||||||||||||
|
($ in millions) |
2023 |
2022 |
2023 |
2022 |
||||||||||||
|
Commercial OEM |
$ |
140.7 |
$ |
165.0 |
$ |
543.5 |
$ |
645.9 |
||||||||
|
Military OEM |
80.1 |
74.7 |
261.1 |
292.4 |
||||||||||||
|
Total OEM Revenue |
220.8 |
239.7 |
804.6 |
938.3 |
||||||||||||
|
Commercial Aftermarket |
95.6 |
65.6 |
325.5 |
245.0 |
||||||||||||
|
Military Aftermarket |
63.9 |
54.6 |
213.0 |
224.4 |
||||||||||||
|
Total Aftermarket Revenue |
159.5 |
120.2 |
538.5 |
469.4 |
||||||||||||
|
Non-Aviation Revenue |
12.3 |
24.5 |
33.6 |
46.4 |
||||||||||||
|
Amortization of acquired contract liabilities |
0.7 |
2.2 |
2.5 |
5.9 |
||||||||||||
|
Total Net Sales* |
$ |
393.3 |
$ |
386.7 |
$ |
1,379.1 |
$ |
1,459.9 |
||||||||
|
* Differences due to rounding |
||||||||||||||||
|
Note> Aftermarket sales include both repair & overhaul services and spare parts sales. |
||||||||||||||||
Excluding impacts from divestitures and exited or sunsetting programs, fiscal year organic Commercial OEM sales increased $104.5 million, or 28.7% with over half the improvement driven by increased production volumes on the Boeing 737 program, as well as an increases across other commercial fixed wing and rotorcraft programs and an intellectual property transaction.
Military OEM sales decreased $31.3 million, or (10.7)% primarily due to divestitures, as well as lower sales related to the E2-D and AH-64 programs. The decreased sales were partially offset by increased sales related to the CH-53K, and CH-47 programs.
Commercial Aftermarket sales increased $80.6 million, or 32.9%. Excluding impacts from divestitures, organic Commercial Aftermarket sales increased $86.9 million, or 36.8%, driven by the recovery in overall air travel metrics and including increased sales primarily across Boeing 737 commercial platform fleets.
Military aftermarket sales increased $9.3 million, or 17.1% for the fourth quarter of fiscal 2023 relative to the prior year, partially reversing the headwinds experienced in this end market from earlier in the fiscal year.
Increased aftermarket sales improved margins in both the fourth quarter and full fiscal year.
Fourth quarter operating income of $56.2 million includes $2.1 million of restructuring costs and $1.6 million reduction of prior period gain on sale assets and businesses. Net loss for the fourth quarter of 2023 was ($17.5) million or $(0.27) per share and includes $31.6 million in debt extinguishment costs associated with our recent refinancing, $14.6 million in pension settlement charges associated with a multi-employer plan obligation and $2.1 for warrant related items.
TRIUMPH’s results included the following:
|
($ millions except EPS) |
Pre-tax |
After-tax |
Diluted EPS |
|||||||||
|
Loss from Continuing Operations – GAAP |
$ |
(15.4) |
$ |
(17.5) |
$ |
(0.27) |
||||||
|
Adjustments |
||||||||||||
|
Warrant related items |
2.1 |
2.1 |
0.09 |
|||||||||
|
Loss on sale of assets and businesses, net |
1.6 |
1.6 |
0.02 |
|||||||||
|
Restructuring costs |
2.1 |
2.1 |
0.02 |
|||||||||
|
Debt extinguishment losses |
31.6 |
31.6 |
0.36 |
|||||||||
|
Spokane withdrawal liability |
14.6 |
14.6 |
0.17 |
|||||||||
|
Adjusted Income from Continuing Operations – non-GAAP |
$ |
36.7 |
$ |
34.6 |
$ |
0.39 |
||||||
The number of shares used in computing adjusted diluted earnings per share for the fourth quarter of 2023 was 87.9 million.
Backlog, which represents the next 24 months of actual purchase orders with firm delivery dates or contract requirements, was $1.58 billion, up 11% from prior fiscal year end, after adjusting for the impact of the Stuart divestiture. This increase was primarily on commercial narrow body platforms.
For the fourth quarter of fiscal 2023, cash flow provided by operations was $60.0 million.
Outlook
The Company expects net sales for fiscal 2024 will be $1.39 billion to $1.43 billion, reflecting an organic growth rate of 7% – 10%, after excluding approximately $77.9 million in fiscal 2023 revenues from exited businesses.
The Company expects fiscal 2024 operating income of $165.0 million to $180.0 million, and Adjusted EBITDAP of $210.0 million to $225.0 million.
The Company expects fiscal 2024 cash flow from operations of $60.0 million to $80.0 million and approximately $25.0 million to $30.0 million for capital expenditures, resulting in expected free cash flow of $35.0 million to $50.0 million.
Conference Call
TRIUMPH will hold a conference call today, May 17th, at 8:30 a.m. (ET) to discuss the fourth quarter of fiscal 2023 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 May 17th to May 24th by calling (877) 344-7529 (Domestic) or (412) 317-0088 (International), passcode #2434836.
About TRIUMPH
TRIUMPH, headquartered in Radnor, Pennsylvania, designs, engineers, manufactures, repairs and overhauls a broad portfolio of aerospace and defense systems and components. The company serves the global aviation industry, including original equipment manufacturers and the full spectrum of military and commercial aircraft operators.
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, 2022.
FINANCIAL DATA (UNAUDITED) ON FOLLOWING PAGES
|
FINANCIAL DATA (UNAUDITED) |
||||||||||||||||
|
TRIUMPH GROUP, INC. AND SUBSIDIARIES |
||||||||||||||||
|
Three Months Ended |
Year Ended |
|||||||||||||||
|
March 31, |
March 31, |
|||||||||||||||
|
CONDENSED STATEMENTS OF OPERATIONS |
2023 |
2022 |
2023 |
2022 |
||||||||||||
|
Net sales |
$ |
393,289 |
$ |
386,651 |
$ |
1,379,128 |
$ |
1,459,942 |
||||||||
|
Cost of sales (excluding depreciation shown below) |
270,936 |
284,722 |
991,599 |
1,073,063 |
||||||||||||
|
Selling, general & administrative |
53,998 |
49,295 |
210,430 |
202,070 |
||||||||||||
|
Depreciation & amortization |
8,466 |
9,600 |
35,581 |
49,635 |
||||||||||||
|
Impairment of long-lived assets and goodwill |
— |
2,308 |
— |
2,308 |
||||||||||||
|
Restructuring costs |
2,098 |
6,264 |
4,949 |
19,295 |
||||||||||||
|
Loss (gain) on sale of assets and businesses, net |
1,640 |
(4,335) |
(101,523) |
9,294 |
||||||||||||
|
Operating income |
56,151 |
38,797 |
238,092 |
104,277 |
||||||||||||
|
Interest expense and other, net |
36,988 |
30,801 |
137,714 |
135,861 |
||||||||||||
|
Debt extinguishment loss |
31,603 |
— |
33,044 |
11,624 |
||||||||||||
|
Warrant remeasurement gain |
(3,146) |
— |
(8,683) |
— |
||||||||||||
|
Non-service defined benefit expense (income) |
6,061 |
17,754 |
(19,664) |
(5,373) |
||||||||||||
|
Income tax expense |
2,188 |
817 |
6,088 |
4,923 |
||||||||||||
|
Net (loss) income |
$ |
(17,543) |
$ |
(10,575) |
$ |
89,593 |
$ |
(42,758) |
||||||||
|
(Loss) earnings per share – basic: |
||||||||||||||||
|
Net (loss) income |
$ |
(0.27) |
$ |
(0.16) |
$ |
1.38 |
$ |
(0.66) |
||||||||
|
Weighted average common shares outstanding – basic |
65,189 |
64,640 |
65,021 |
64,538 |
||||||||||||
|
(Loss) earnings per share – diluted: |
||||||||||||||||
|
Net (loss) income |
$ |
(0.27) |
$ |
(0.16) |
$ |
1.20 |
$ |
(0.66) |
||||||||
|
Weighted average common shares outstanding – diluted |
65,189 |
64,640 |
71,721 |
64,538 |
||||||||||||
(Continued)
|
FINANCIAL DATA (UNAUDITED) |
||||||||
|
TRIUMPH GROUP, INC. AND SUBSIDIARIES |
||||||||
|
BALANCE SHEETS |
Unaudited |
Audited |
||||||
|
Assets |
||||||||
|
Cash and cash equivalents |
$ |
227,403 |
$ |
240,878 |
||||
|
Accounts receivable, net |
196,775 |
178,663 |
||||||
|
Contract assets |
103,027 |
101,828 |
||||||
|
Inventory, net |
389,245 |
361,692 |
||||||
|
Prepaid and other current assets |
17,062 |
19,903 |
||||||
|
Assets held for sale |
— |
60,104 |
||||||
|
Current assets |
933,512 |
963,068 |
||||||
|
Property and equipment, net |
166,800 |
169,050 |
||||||
|
Goodwill |
509,449 |
513,722 |
||||||
|
Intangible assets, net |
73,898 |
84,850 |
||||||
|
Other, net |
31,185 |
30,476 |
||||||
|
Total assets |
$ |
1,714,844 |
$ |
1,761,166 |
||||
|
Liabilities & Stockholders’ Deficit |
||||||||
|
Current portion of long-term debt |
$ |
3,162 |
$ |
3,268 |
||||
|
Accounts payable |
197,932 |
161,534 |
||||||
|
Contract liabilities |
44,482 |
171,763 |
||||||
|
Accrued expenses |
151,348 |
208,059 |
||||||
|
Liabilities related to assets held for sale |
— |
57,519 |
||||||
|
Current liabilities |
396,924 |
602,143 |
||||||
|
Long-term debt, less current portion |
1,688,620 |
1,586,222 |
||||||
|
Accrued pension and post-retirement benefits, noncurrent |
359,375 |
301,303 |
||||||
|
Deferred income taxes, noncurrent |
7,268 |
7,213 |
||||||
|
Other noncurrent liabilities |
60,053 |
51,708 |
||||||
|
Stockholders’ Deficit: |
||||||||
|
Common stock, $.001 par value, 100,000,000 shares authorized, |
65 |
64 |
||||||
|
Capital in excess of par value |
964,741 |
973,112 |
||||||
|
Treasury stock, at cost, 0 and 14,897 shares |
— |
(96) |
||||||
|
Accumulated other comprehensive loss |
(554,646) |
(463,354) |
||||||
|
Accumulated deficit |
(1,207,556) |
(1,297,149) |
||||||
|
Total stockholders’ deficit |
(797,396) |
(787,423) |
||||||
|
Total liabilities and stockholders’ deficit |
$ |
1,714,844 |
$ |
1,761,166 |
||||
(Continued)
|
FINANCIAL DATA (UNAUDITED) |
||||||||
|
TRIUMPH GROUP, INC. AND SUBSIDIARIES |
||||||||
|
Fiscal Year Ended March 31 |
||||||||
|
2023 |
2022 |
|||||||
|
Operating Activities |
||||||||
|
Net income (loss) |
$ |
89,593 |
$ |
(42,758) |
||||
|
Adjustments to reconcile net income (loss) to net cash used in |
||||||||
|
Depreciation and amortization |
35,575 |
49,635 |
||||||
|
Impairment of long-lived assets |
— |
2,308 |
||||||
|
Amortization of acquired contract liability |
(2,500) |
(5,871) |
||||||
|
(Gain) loss on sale of assets and businesses |
(101,523) |
9,294 |
||||||
|
Curtailments, settlements, withdrawals, and special termination benefits loss, net |
14,644 |
52,005 |
||||||
|
Gain on debt redemption of 2024 Second Lien Notes |
(24,944) |
— |
||||||
|
Other amortization included in interest expense |
12,872 |
9,047 |
||||||
|
Provision for credit losses |
1,594 |
452 |
||||||
|
Provision (benefit) for deferred income taxes |
14 |
25 |
||||||
|
Warrants remeasurement gain |
(9,796) |
— |
||||||
|
Share-based compensation |
8,913 |
9,782 |
||||||
|
Changes in other assets and liabilities, excluding the effects of |
||||||||
|
Trade and other receivables |
(26,433) |
2,822 |
||||||
|
Contract assets |
(9,055) |
702 |
||||||
|
Inventories |
(28,187) |
25,642 |
||||||
|
Prepaid expenses and other current assets |
1,970 |
(1,122) |
||||||
|
Accounts payable, accrued expenses, and contract liabilities |
15,368 |
(189,412) |
||||||
|
Accrued pension and other postretirement benefits |
(32,562) |
(58,597) |
||||||
|
Other, net |
2,206 |
(970) |
||||||
|
Net cash used in operating activities |
(52,251) |
(137,016) |
||||||
|
Investing Activities |
||||||||
|
Capital expenditures |
(20,676) |
(19,660) |
||||||
|
(Payments on) proceeds from sale of assets and businesses |
(6,220) |
224,518 |
||||||
|
Investment in joint venture |
(272) |
(2,101) |
||||||
|
Purchase of facility related to divested businesses |
— |
(21,550) |
||||||
|
Net cash (used in) provided by investing activities |
(27,168) |
181,207 |
||||||
|
Financing Activities |
||||||||
|
Net increase in revolving credit facility |
— |
— |
||||||
|
Proceeds from issuance of long-term debt |
1,235,000 |
107 |
||||||
|
Retirement of debt and finance lease obligations |
(1,101,520) |
(380,009) |
||||||
|
Payment of deferred financing costs |
(17,097) |
(400) |
||||||
|
Proceeds on issuance of common stock, net of issuance costs |
4,090 |
— |
||||||
|
Premium on redemption of Senior Notes |
(51,138) |
(9,108) |
||||||
|
Repurchase of shares for share-based compensation |
(3,547) |
(3,249) |
||||||
|
Net cash provided by (used in) financing activities |
65,788 |
(392,659) |
||||||
|
Effect of exchange rate changes on cash |
156 |
(536) |
||||||
|
Net change in cash and cash equivalents |
(13,475) |
(349,004) |
||||||
|
Cash and cash equivalents at beginning of period |
240,878 |
589,882 |
||||||
|
Cash and cash equivalents at end of period |
$ |
227,403 |
$ |
240,878 |
||||
(Continued)
|
FINANCIAL DATA (UNAUDITED) |
||||||||||||||||
|
TRIUMPH GROUP, INC. AND SUBSIDIARIES |
||||||||||||||||
|
Three Months Ended |
Year Ended |
|||||||||||||||
|
March 31, |
March 31, |
|||||||||||||||
|
SEGMENT DATA |
2023 |
2022 |
2023 |
2022 |
||||||||||||
|
Net sales: |
||||||||||||||||
|
Systems & Support |
$ |
353,414 |
$ |
286,969 |
$ |
1,167,533 |
$ |
1,030,444 |
||||||||
|
Interiors (formerly Aerospace Structures) |
39,878 |
99,684 |
211,647 |
429,547 |
||||||||||||
|
Elimination of inter-segment sales |
(3) |
(2) |
(52) |
(49) |
||||||||||||
|
$ |
393,289 |
$ |
386,651 |
$ |
1,379,128 |
$ |
1,459,942 |
|||||||||
|
Operating income: |
||||||||||||||||
|
Systems & Support |
$ |
71,306 |
$ |
49,237 |
$ |
190,863 |
$ |
163,450 |
||||||||
|
Interiors (formerly Aerospace Structures) |
2,424 |
2,666 |
11,069 |
13,982 |
||||||||||||
|
Corporate |
(15,086) |
(10,988) |
45,073 |
(63,373) |
||||||||||||
|
Share-based compensation expense |
(2,493) |
(2,118) |
(8,913) |
(9,782) |
||||||||||||
|
$ |
56,151 |
$ |
38,797 |
$ |
238,092 |
$ |
104,277 |
|||||||||
|
Operating margin % |
||||||||||||||||
|
Systems & Support |
20.2 |
% |
17.2 |
% |
16.3 |
% |
15.9 |
% |
||||||||
|
Interiors (formerly Aerospace Structures) |
6.1 |
% |
2.7 |
% |
5.2 |
% |
3.3 |
% |
||||||||
|
Consolidated |
14.3 |
% |
10.0 |
% |
17.3 |
% |
7.1 |
% |
||||||||
|
Depreciation and amortization^: |
||||||||||||||||
|
Systems & Support |
$ |
7,334 |
$ |
7,699 |
$ |
29,781 |
$ |
32,464 |
||||||||
|
Interiors (formerly Aerospace Structures) |
624 |
3,556 |
3,683 |
16,234 |
||||||||||||
|
Corporate |
508 |
653 |
2,117 |
3,245 |
||||||||||||
|
$ |
8,466 |
$ |
11,908 |
$ |
35,581 |
$ |
51,943 |
|||||||||
|
Amortization of acquired contract liabilities: |
||||||||||||||||
|
Systems & Support |
$ |
(668) |
$ |
(2,226) |
$ |
(2,500) |
$ |
(5,859) |
||||||||
|
Interiors (formerly Aerospace Structures) |
— |
— |
— |
(12) |
||||||||||||
|
$ |
(668) |
$ |
(2,226) |
$ |
(2,500) |
$ |
(5,871) |
|||||||||
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures
We prepare and publicly release annual audited and quarterly unaudited financial statements prepared in accordance with U.S. GAAP. In accordance with Securities and Exchange Commission (the “SEC”) rules, we also disclose and discuss certain non-GAAP financial measures in our public filings and earning releases. Currently, the non-GAAP financial measures that we disclose are Adjusted EBITDA, which is our net income (loss) before interest and gains or losses on debt extinguishment, income taxes, amortization of acquired contract liabilities, consideration payable to customer related to divestitures, legal judgments and settlements, gains/loss on divestitures, gains/losses on warrant remeasurements and warrant-related transaction costs, share-based compensation expense, depreciation and amortization (including impairment of long-lived assets), other non-recurring impairments, and the effects of certain pension charges such as curtailments, settlements, withdrawals, and other early retirement incentives; and Adjusted EBITDAP, which is Adjusted EBITDA, before pension expense or benefit (excluding pension charges already adjusted in Adjusted EBITDA). We disclose Adjusted EBITDA on a consolidated and Adjusted EBITDAP on a consolidated and a reportable 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 with our previously reported results of operations.
We view Adjusted EBITDA and Adjusted EBITDAP as operating performance measures and, as such, we believe that the U.S. GAAP financial measure most directly comparable to such measures is net income (loss). In calculating Adjusted EBITDA and Adjusted EBITDAP, we exclude from net income (loss) 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 U.S. GAAP and should not be considered as a measure of liquidity, as an alternative to net income (loss), or as an indicator of any other measure of performance derived in accordance with U.S. GAAP. Investors and potential investors in our securities should not rely on Adjusted EBITDA or Adjusted EBITDAP as a substitute for any U.S. GAAP financial measure, including net income (loss). 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 (loss) set forth below, in our earnings releases, and in other filings with the SEC and to carefully review the U.S. 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 U.S. GAAP financial information with our Adjusted EBITDA and Adjusted EBITDAP.
Adjusted EBITDA and Adjusted EBITDAP are 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 U.S. 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 (loss) 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 are measures of our ongoing operating performance because the isolation of noncash charges, such as depreciation and amortization, and nonoperating items, such as interest, income taxes, pension and other postretirement benefits, 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 financial measures by which to compare our operating performance against that of other companies in our industry.
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
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 these non-GAAP financial measures as compared with net income from continuing operations:
- Gains or losses from sale of assets and businesses may be useful for investors to consider because they reflect gains or losses from sale of operating units or other assets. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations.
- Warrants remeasurement gains or losses and warrant-related transaction costs may be useful for investors to consider because they reflect the mark-to-market changes in the fair value of our warrants and the costs associated with warrants issuance or settlement. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations.
- Consideration payable to a customer related to a divestiture may be useful for investors to consider because it reflects consideration paid to facilitate the ultimate sale of operating units. We do not believe these charges necessarily reflect the current and ongoing cash earnings related to our operations.
- Legal judgments and settlements, when applicable, may be useful for investors to consider because it reflects gains or losses from disputes with third parties. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations.
- Non-service defined benefit income or expense from our pension and other postretirement benefit plans (inclusive of certain pension related transactions such as curtailments, settlements, withdrawal, and early retirement or other incentives) may be useful for investors to consider because they represent the cost of postretirement 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 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 noncash earnings on the fair value of off-market contracts acquired through acquisitions. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations.
- Amortization expense and nonrecurring asset impairments (including goodwill, intangible asset impairments, and nonrecurring rotable inventory impairments) may be useful for investors to consider because it represents the estimated attrition of our acquired customer base and the diminishing value of trade names, product rights, licenses, or, in the case of goodwill, other assets that are not individually identified and separately recognized under U.S. GAAP, or, in the case of nonrecurring asset impairments, the impact of unusual and nonrecurring events affecting the estimated recoverability of existing assets. 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 it generally represents 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.
- Share-based compensation may be useful for investors to consider because it represents a portion of the total compensation to management and the board of directors. 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, as well as debt extinguishment gains or losses, 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 and debt extinguishment gains or losses 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.
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
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.
The following table shows our Adjusted EBITDA and Adjusted EBITDAP reconciled to our net income for the indicated periods (in thousands):
|
Three Months Ended |
Year Ended |
|||||||||||||||
|
March 31, |
March 31, |
|||||||||||||||
|
Adjusted Earnings before Interest, Taxes, Depreciation, |
2023 |
2022 |
2023 |
2022 |
||||||||||||
|
Net (loss) income |
$ |
(17,543) |
$ |
(10,575) |
$ |
89,593 |
$ |
(42,758) |
||||||||
|
Add-back: |
||||||||||||||||
|
Income tax expense |
2,188 |
817 |
6,088 |
4,923 |
||||||||||||
|
Interest expense and other, net |
36,988 |
30,801 |
137,714 |
135,861 |
||||||||||||
|
Debt extinguishment loss |
31,603 |
— |
33,044 |
11,624 |
||||||||||||
|
Warrant remeasurement gain |
(3,146) |
— |
(8,683) |
— |
||||||||||||
|
Pension charges |
14,644 |
31,959 |
14,644 |
52,005 |
||||||||||||
|
Consideration Payable to customer related to |
— |
— |
17,185 |
— |
||||||||||||
|
Loss (gain) on sales of assets and businesses, net |
1,640 |
(4,335) |
(101,523) |
9,294 |
||||||||||||
|
Share-based compensation |
2,493 |
2,118 |
8,913 |
9,782 |
||||||||||||
|
Amortization of acquired contract liabilities |
(668) |
(2,226) |
(2,500) |
(5,871) |
||||||||||||
|
Depreciation and amortization |
8,466 |
11,908 |
35,581 |
51,943 |
||||||||||||
|
Adjusted Earnings before Interest, Taxes, Depreciation |
$ |
76,665 |
$ |
60,467 |
$ |
230,056 |
$ |
226,803 |
||||||||
|
Non-service defined benefit income (excluding |
(8,583) |
(14,205) |
(34,308) |
(57,378) |
||||||||||||
|
Adjusted Earnings before Interest, Taxes, Depreciation |
$ |
68,082 |
$ |
46,262 |
$ |
195,748 |
$ |
169,425 |
||||||||
|
Net sales |
$ |
393,289 |
$ |
386,651 |
$ |
1,379,128 |
$ |
1,459,942 |
||||||||
|
Net income margin |
(4.5) |
% |
(2.7) |
% |
6.5 |
% |
(2.9) |
% |
||||||||
|
Adjusted EBITDAP margin |
17.3 |
% |
12.0 |
% |
14.0 |
% |
11.7 |
% |
||||||||
(Continued)
|
FINANCIAL DATA (UNAUDITED) |
||||||||||||||||
|
TRIUMPH GROUP, INC. AND SUBSIDIARIES |
||||||||||||||||
|
Three Months Ended March 31, 2023 |
||||||||||||||||
|
Segment Data |
||||||||||||||||
|
Adjusted Earnings before Interest, Taxes, Depreciation, |
Total |
Systems & |
Interiors# |
Corporate/ |
||||||||||||
|
Net loss |
$ |
(17,543) |
||||||||||||||
|
Add-back: |
||||||||||||||||
|
Non-service defined benefit expense |
6,061 |
|||||||||||||||
|
Income tax expense |
2,188 |
|||||||||||||||
|
Warrant remeasurement gain |
(3,146) |
|||||||||||||||
|
Debt extinguishment loss |
31,603 |
|||||||||||||||
|
Interest expense and other, net |
36,988 |
|||||||||||||||
|
Operating income (loss) |
$ |
56,151 |
$ |
71,306 |
$ |
2,424 |
$ |
(17,579) |
||||||||
|
Loss on sales of assets & businesses, net |
1,640 |
— |
— |
1,640 |
||||||||||||
|
Share-based compensation |
2,493 |
— |
— |
2,493 |
||||||||||||
|
Amortization of acquired contract liabilities |
(668) |
(668) |
— |
— |
||||||||||||
|
Depreciation and amortization |
8,466 |
7,334 |
624 |
508 |
||||||||||||
|
Adjusted Earnings (Losses) before Interest, Taxes, |
$ |
68,082 |
$ |
77,972 |
$ |
3,048 |
$ |
(12,938) |
||||||||
|
Net sales |
$ |
393,289 |
$ |
353,414 |
$ |
39,878 |
$ |
(3) |
||||||||
|
Adjusted EBITDAP margin |
17.3 |
% |
22.1 |
% |
7.6 |
% |
n/a |
|||||||||
|
Year Ended March 31, 2023 |
||||||||||||||||
|
Segment Data |
||||||||||||||||
|
Adjusted Earnings before Interest, Taxes, Depreciation, |
Total |
Systems & |
Interiors# |
Corporate/ |
||||||||||||
|
Net income |
$ |
89,593 |
||||||||||||||
|
Add-back: |
||||||||||||||||
|
Non-service defined benefit income |
(19,664) |
|||||||||||||||
|
Income tax expense |
6,088 |
|||||||||||||||
|
Warrant remeasurement gain, net |
(8,683) |
|||||||||||||||
|
Debt extinguishment loss |
33,044 |
|||||||||||||||
|
Interest expense and other, net |
137,714 |
|||||||||||||||
|
Operating income |
$ |
238,092 |
$ |
190,863 |
$ |
11,069 |
$ |
36,160 |
||||||||
|
Gain on sales of assets & businesses, net |
(101,523) |
— |
— |
(101,523) |
||||||||||||
|
Consideration payable to customer related to |
17,185 |
— |
17,185 |
— |
||||||||||||
|
Share-based compensation |
8,913 |
— |
— |
8,913 |
||||||||||||
|
Amortization of acquired contract liabilities |
(2,500) |
(2,500) |
— |
— |
||||||||||||
|
Depreciation and amortization |
35,581 |
29,781 |
3,683 |
2,117 |
||||||||||||
|
Adjusted Earnings (Losses) before Interest, Taxes, |
$ |
195,748 |
$ |
218,144 |
$ |
31,937 |
$ |
(54,333) |
||||||||
|
Net sales |
$ |
1,379,128 |
$ |
1,167,533 |
$ |
211,647 |
$ |
(52) |
||||||||
|
Adjusted EBITDAP margin |
14.0 |
% |
18.7 |
% |
14.0 |
% |
n/a |
|||||||||
(Continued)
|
FINANCIAL DATA (UNAUDITED) |
||||||||||||||||
|
TRIUMPH GROUP, INC. AND SUBSIDIARIES |
||||||||||||||||
|
Non-GAAP Financial Measure Disclosures (continued) |
||||||||||||||||
|
Three Months Ended March 31, 2022 |
||||||||||||||||
|
Segment Data |
||||||||||||||||
|
Adjusted Earnings before Interest, Taxes, Depreciation, |
Total |
Systems & |
Interiors# |
Corporate/ |
||||||||||||
|
Net loss |
$ |
(10,575) |
||||||||||||||
|
Add-back: |
||||||||||||||||
|
Non-service defined benefit expense |
17,754 |
|||||||||||||||
|
Income tax expense |
817 |
|||||||||||||||
|
Interest expense and other, net |
30,801 |
|||||||||||||||
|
Operating income (loss) |
$ |
38,797 |
$ |
49,237 |
$ |
2,666 |
$ |
(13,106) |
||||||||
|
Gain on sales of assets & businesses, net |
(4,335) |
— |
— |
(4,335) |
||||||||||||
|
Share-based compensation |
2,118 |
— |
— |
2,118 |
||||||||||||
|
Amortization of acquired contract liabilities |
(2,226) |
(2,226) |
— |
— |
||||||||||||
|
Depreciation and amortization |
11,908 |
7,699 |
3,556 |
653 |
||||||||||||
|
Adjusted Earnings (Losses) before Interest, Taxes, |
$ |
46,262 |
$ |
54,710 |
$ |
6,222 |
$ |
(14,670) |
||||||||
|
Net sales |
$ |
386,651 |
$ |
286,969 |
$ |
99,684 |
$ |
(2) |
||||||||
|
Adjusted EBITDAP margin |
12.0 |
% |
19.2 |
% |
6.2 |
% |
n/a |
|||||||||
|
Year Ended March 31, 2022 |
||||||||||||||||
|
Segment Data |
||||||||||||||||
|
Adjusted Earnings before Interest, Taxes, Depreciation, |
Total |
Systems & |
Interiors# |
Corporate/ |
||||||||||||
|
Net loss |
$ |
(42,758) |
||||||||||||||
|
Add-back: |
||||||||||||||||
|
Non-service defined benefit income |
(5,373) |
|||||||||||||||
|
Income tax expense |
4,923 |
|||||||||||||||
|
Debt extinguishment loss |
11,624 |
|||||||||||||||
|
Interest expense and other, net |
135,861 |
|||||||||||||||
|
Operating income (loss) |
$ |
104,277 |
$ |
163,450 |
$ |
13,982 |
$ |
(73,155) |
||||||||
|
Loss on sales of assets & businesses, net |
9,294 |
— |
— |
9,294 |
||||||||||||
|
Share-based compensation |
9,782 |
— |
— |
9,782 |
||||||||||||
|
Amortization of acquired contract liabilities |
(5,871) |
(5,859) |
(12) |
— |
||||||||||||
|
Depreciation and amortization |
51,943 |
32,464 |
16,234 |
3,245 |
||||||||||||
|
Adjusted Earnings (Losses) before Interest, Taxes, |
$ |
169,425 |
$ |
190,055 |
$ |
30,204 |
$ |
(50,834) |
||||||||
|
Net sales |
$ |
1,459,942 |
$ |
1,030,444 |
$ |
429,547 |
$ |
(49) |
||||||||
|
Adjusted EBITDAP margin |
11.7 |
% |
18.5 |
% |
7.0 |
% |
n/a |
|||||||||
(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 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 |
||||||||||||
|
Pre-Tax |
After-Tax |
Diluted EPS |
||||||||||
|
Loss from continuing operations – GAAP |
$ |
(15,355) |
$ |
(17,543) |
$ |
(0.27) |
||||||
|
Adjustments: |
||||||||||||
|
Warrant related items |
2,083 |
2,083 |
0.09 |
|||||||||
|
Loss on sale of assets and businesses, net |
1,640 |
1,640 |
0.02 |
|||||||||
|
Restructuring costs |
2,098 |
2,098 |
0.02 |
|||||||||
|
Debt extinguishment loss |
31,603 |
31,603 |
0.36 |
|||||||||
|
Spokane pension withdrawal |
14,644 |
14,644 |
0.17 |
|||||||||
|
Adjusted income from continuing operations – non-GAAP |
$ |
36,713 |
$ |
34,525 |
$ |
0.39 |
||||||
|
Year Ended |
||||||||||||
|
Pre-Tax |
After-Tax |
Diluted EPS |
||||||||||
|
Income from continuing operations – GAAP |
$ |
95,681 |
$ |
89,593 |
||||||||
|
GAAP EPS Numerator Adjustments: |
||||||||||||
|
Warrant related items |
$ |
(3,626) |
$ |
(3,626) |
||||||||
|
GAAP EPS Numerator: |
$ |
92,055 |
$ |
85,967 |
$ |
1.20 |
||||||
|
Adjustments: |
||||||||||||
|
Gain on sale of assets and businesses, net |
(101,523) |
(101,523) |
(1.42) |
|||||||||
|
Restructuring costs |
4,949 |
4,949 |
0.07 |
|||||||||
|
Consideration payable to customer related to divestiture^ |
17,185 |
17,185 |
0.24 |
|||||||||
|
Debt extinguishment loss |
33,044 |
33,044 |
0.46 |
|||||||||
|
Spokane pension withdrawal |
14,644 |
14,644 |
0.20 |
|||||||||
|
Warrant issuance costs |
1,113 |
1,113 |
0.02 |
|||||||||
|
Adjusted income from continuing operations – non-GAAP* |
$ |
61,467 |
$ |
55,379 |
$ |
0.77 |
||||||
|
Three Months Ended |
||||||||||||
|
Pre-Tax |
After-Tax |
Diluted EPS |
||||||||||
|
Loss from continuing operations – GAAP |
$ |
(9,758) |
$ |
(10,575) |
$ |
(0.16) |
||||||
|
Adjustments: |
||||||||||||
|
Gain on sale of assets and businesses, net |
(4,335) |
(4,335) |
(0.07) |
|||||||||
|
Restructuring costs (cash based) |
6,264 |
6,264 |
0.10 |
|||||||||
|
Restructuring costs (non-cash – long-lived asset impairment) |
2,308 |
2,308 |
0.04 |
|||||||||
|
Pension charges |
31,959 |
31,959 |
0.49 |
|||||||||
|
Adjusted income from continuing operations – non-GAAP* |
$ |
26,438 |
$ |
25,621 |
0.39 |
|||||||
(Continued)
|
FINANCIAL DATA (UNAUDITED) |
||||||||||||
|
TRIUMPH GROUP, INC. AND SUBSIDIARIES |
||||||||||||
|
Year Ended |
||||||||||||
|
Pre-Tax |
After-Tax |
Diluted EPS |
||||||||||
|
Loss from continuing operations – GAAP |
$ |
(37,835) |
$ |
(42,758) |
$ |
(0.66) |
||||||
|
Adjustments: |
||||||||||||
|
Loss on sale of assets and businesses, net |
9,294 |
9,294 |
0.14 |
|||||||||
|
Restructuring costs (cash based) |
19,295 |
19,295 |
0.30 |
|||||||||
|
Restructuring costs (non-cash – long-lived asset impairment) |
2,308 |
2,308 |
0.04 |
|||||||||
|
Pension charges |
52,005 |
52,005 |
0.80 |
|||||||||
|
Debt extinguishment loss |
11,624 |
11,624 |
0.18 |
|||||||||
|
Adjusted income from continuing operations – non-GAAP* |
$ |
56,691 |
$ |
51,768 |
$ |
0.79 |
||||||
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, 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 |
Year Ended |
|||||||||||||||
|
2023 |
2022 |
2023 |
2022 |
|||||||||||||
|
Operating income – GAAP |
$ |
56,151 |
$ |
38,797 |
$ |
238,092 |
$ |
104,277 |
||||||||
|
Adjustments: |
||||||||||||||||
|
Loss (gain) on sale of assets and businesses, net |
1,640 |
(4,335) |
(101,523) |
9,294 |
||||||||||||
|
Restructuring costs (cash based) |
2,098 |
6,264 |
4,949 |
19,295 |
||||||||||||
|
Restructuring costs (non-cash – long-lived asset |
— |
2,308 |
— |
2,308 |
||||||||||||
|
Consideration payable to customer related to divestiture |
— |
— |
17,185 |
— |
||||||||||||
|
Adjusted operating income – non-GAAP |
$ |
59,889 |
$ |
43,034 |
$ |
158,703 |
$ |
135,174 |
||||||||
|
Fiscal 2024 |
||
|
($ in millions) |
Guidance |
|
|
Operating Income |
$165.0 – $180.0 |
|
|
Adjustments: |
||
|
Depreciation & Amortization |
$38.0 |
|
|
Amortization of acquired contract liabilities |
($3.0) |
|
|
Share-based compensation |
$10.0 |
|
|
Adjusted EBITDAP – non-GAAP |
$210.0 – $225.0 |
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
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 |
Fiscal Year Ended |
Fiscal 2024 |
||||||||||||||||
|
$ in millions |
2023 |
2022 |
2023 |
2022 |
||||||||||||||
|
Cash used in operating activities |
$ |
60.0 |
$ |
33.0 |
$ |
(52.3) |
$ |
(137.0) |
$ 60.0 – $ 80.0 |
|||||||||
|
Less: |
||||||||||||||||||
|
Capital expenditures |
(8.3) |
(3.9) |
(20.7) |
(19.7) |
$ (25.0) – $ (30.0) |
|||||||||||||
|
Free cash use |
$ |
51.8 |
$ |
29.1 |
$ |
(72.9) |
$ |
(156.7) |
$ 35.0 – $ 50.0 |
|||||||||
View original content:https://www.prnewswire.com/news-releases/triumph-reports-fouth-quarter-fiscal-2023-results-301826726.html
SOURCE Triumph Group
