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Section 1: 8-K (8-K - DATED 5.8.2019)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
 
FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported): May 8, 2019
 
TRIUMPH GROUP, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
1-12235
 
51-0347963
(State or other jurisdiction of
incorporation)
 
(Commission File Number)
 
(IRS Employer Identification
No.)
 
 
 
 
 
899 Cassatt Road, Suite 210
 
19312
Berwyn, Pennsylvania
 
(Zip Code)
(Address of principal executive offices)
 
 
 
(610) 251-1000
(Registrant's telephone number, including area code)
 
Not Applicable
(Former name or former address, if changed since last report.)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o







Item 2.02
 
Results of Operations and Financial Condition.
 
On May 8, 2019, Triumph Group, Inc. issued a press release announcing its financial results for the fiscal year ended March 31, 2019, and will conduct a conference call to further discuss the financial results.  The full text of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Item 7.01
 
Regulation FD Disclosure

On the conference call referenced in Item 2.02 above, certain information will be presented. The information to be presented during such conference call is attached as Exhibit 99.2 and Exhibit 99.3 to this Current Report on Form 8-K.
The information in this Item 7.01 of this Current Report on Form 8-K, Exhibit 99.2 and Exhibit 99.3 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

 
Item 9.01
 
Financial Statements and Exhibits.
(b)
 
Pro forma financial information: The unaudited pro forma condensed financial information of the Company giving effect to the Transition and certain other transactions is filed as Exhibit 99.3 to this Current Report on Form 8-K and incorporated herein by reference.
(d)       
 
Exhibits.
 
Exhibit No.
 
Description
 
 
 
 
 
 


 








Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Date:
May 8, 2019
TRIUMPH GROUP, INC.
 
 
 
 
 
 
By:
/s/ Thomas A. Quigley, III
 
 
 
Thomas A. Quigley, III
 
 
 
Vice President and Controller




(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1 - EARNINGS RELEASE DATED 5.8.2019)

Exhibit


Exhibit 99.1
    
397850217_logowhitea24.jpg
NEWS RELEASE                     
Media Contact:                                Investor Relations Contact:
Michele Long                                Michael Pici
Phone (610) 251-1000                            Phone (610) 251-1000
[email protected]                        mpici@triumphgroup.com


TRIUMPH GROUP REPORTS FOURTH QUARTER FISCAL 2019 RESULTS

Generated Positive Free Cash Flow in Fiscal Fourth Quarter

Fiscal 2019 Portfolio and Restructuring Activities Support Shift to Core Business

Provides Fiscal Year 2020 Guidance including Positive Free Cash Flow


BERWYN, Pa. - May 8, 2019 - Triumph Group, Inc. (NYSE: TGI) (“Triumph” or the “Company”) today reported financial results for its fourth quarter of fiscal year 2019, which ended March 31, 2019.

Fourth Quarter Fiscal 2019
Net sales of $869.0 million
Operating loss of ($189.2) million with operating margin of (22%); adjusted operating income of $64.0 million with adjusted operating margin of 7%
Net loss of ($199.6) million, or ($4.01) per share; adjusted net income of $57.8 million, or $1.15 per diluted share
Cash flow from operations of $18.8 million, and free cash flow was $6.5 million

Full-Year Fiscal 2019
Net sales of $3.4 billion
Loss per share of ($6.47); adjusted earnings per diluted share of $2.49, which includes $0.61 from changes in tax valuation allowance
Cash used in operations was ($174.3) million and free cash use was ($221.4) million

Outlook for Fiscal 2020
Net sales guidance of between $2.8 to $2.9 billion
GAAP and adjusted earnings per diluted share of between $2.35 to $2.95
Free cash flow of between $0 to $50.0 million

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“Triumph Group’s fourth quarter capped off a year of significant progress for our Company as we delivered on key transformation objectives, including de-risking the portfolio and meeting net sales, earnings per share and positive free cash flow targets,” stated Daniel J. Crowley, Triumph’s president and chief executive officer. “Our core Integrated Systems and Product Support segments achieved year-over-year organic growth for the fifth consecutive quarter and continued to generate solid operating margins. Further, our Aerospace Structures segment delivered year-over-year margin expansion, reflecting the impact of core program performance and strategic divestitures.”
Mr. Crowley continued, “Losses in the quarter were primarily attributed to Path to value actions in our Structures business which included the completion of our Machining and Fabrication divestitures, the assignment of the E2 contract to ASTK and the transition of our G280 wing manufacturing activities to IAI. These recent actions, along with our prior divestitures, significant cost reductions and operational improvement initiatives substantially complete our restructuring and position Triumph for the future.”
Mr. Crowley concluded, “Moving into fiscal 2020, we now have an increased level of stability across our three business units and believe there is more room to enhance profitability through lean initiatives and smart portfolio optimization. We remain focused on delivering predictable profitability, continued positive free cash flow and increased value for our stockholders.”

Fourth Quarter Fiscal Year 2019 Overview

After accounting for divestitures and the impact of the adoption of ASC 606, sales for the fourth quarter of fiscal 2019 were essentially flat organically from the comparable prior year period. Increased shipments for narrow body programs such as the 737, 787 and A320, military platforms, aftermarket accessory services and development programs transitioning to production were offset by declines in business jet volumes.
Fourth quarter operating loss of ($189.2) million included a $217.5 million loss on divestitures, $12.9 million of restructuring costs, a forward loss charge of $26.5 million on the G280 program and a forward loss reduction of ($3.7) million on the E2 Jet program. Net loss for the fourth quarter of fiscal year 2019 was ($199.6) million, or ($4.01) per share. On an adjusted basis, net income was $49.6 million, or $1.15 per diluted share. Triumph’s results included the following:

($ millions except EPS)
 
Pre-tax
 
After-tax
 
Diluted EPS
 
Loss from Continuing Operations - GAAP
 
$(207.8)
    
$(199.6)
 
$(4.01)
 
 
 
 
 
 
 
 
 
Loss on divestitures
 
217.5
 
217.5
 
4.37
 
Curtailment & settlement, net
 
4.2
 
4.2
 
0.08
 
E2 Jet program forward loss reduction
 
(3.7)
 
(3.7)
 
(0.07)
 
G280 program forward loss charge
 
26.5
 
26.5
 
0.53
 
Transformation related costs:
 
 
 
 
 
 
 
Restructuring costs (cash)
 
12.9
 
12.9
 
0.26
 
 
 
 
 
 
 
 
 
Adjusted Income from Continuing Operations - non-GAAP
 
$49.6
    
$57.8
 
$1.15
*
* Difference due to rounding
 
 
 
 
 
 
 



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Net loss for fiscal year 2019 was ($321.8) million or a loss of ($6.47) per share, or $2.49 earnings per diluted share on an adjusted basis, and included the following:

($ millions except EPS)
 
Pre-tax
 
After-tax
 
Diluted EPS
 
Loss from Continuing Operations - GAAP
 
$(327.2)
    
$(321.8)
 
$(6.47)
 
 
 
 
 
 
 
 
 
Adoption of ASU 2017-07
 
87.2
 
87.2
 
1.76
 
Loss on divestitures
 
235.3
 
235.3
 
4.73
 
Curtailment & settlements, net
 
4.2
 
4.2
 
0.08
 
Global 7500 forward loss charge
 
60.4
 
60.4
 
1.21
 
E2 Jet program forward loss charge
 
5.5
 
5.5
 
0.11
 
G280 program forward loss charge
 
29.1
 
29.1
 
0.58
 
Reduction of prior Gulfstream forward loss
 
(7.6)
 
(7.6)
 
(0.15)
 
Refinancing costs
 
1.3
 
1.3
 
0.03
 
Transformation related costs:
 
 
 
 
 
 
 
Restructuring costs (cash)
 
31.1
 
31.1
 
0.62
 
 
 
 
 
 
 
 
 
Adjusted Income from Continuing Operations - non-GAAP
 
$119.2
    
$124.6
 
$2.49
*
* Difference due to rounding

 
 
 
 
 
 
 

The number of shares used in computing diluted earnings per share for the fourth quarter and full fiscal year 2019 was 50.0 million.
Backlog was $3.8 billion, up 4% organically compared to the prior year period and flat on a sequential basis reflecting increased selectivity in pursuing new awards based on projected profitability and cash flow, growth in our Integrated Systems business and the impact of divestitures in Aerospace Structures.

For the three-months ended March 31, 2019, cash flow from operations was $18.8 million, reflecting approximately ($24.0) million of cash used on the Global 7500 program.
  
Outlook

Based on anticipated aircraft production rates and including the impacts of pending program transfers, the Company expects that net sales for fiscal year 2020 will be approximately $2.8 to $2.9 billion.

The Company expects fiscal year 2020 earnings per share to be $2.35 to $2.95 per diluted share.

The Company expects fiscal year 2020 cash provided from operations of $50.0 to $110.0 million, and free cash flow of $0 to $50.0 million.

The Company’s current outlook reflects adjustments detailed in the attached tables but excludes the impact of any potential future divestitures.



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Conference Call

Triumph Group will hold a conference call today, May 8th at 8:30 a.m. (ET) to discuss the fourth quarter fiscal year 2019 results. The conference call will be available live and archived on the Company’s website at http://www.triumphgroup.com. A slide presentation will be included with the audio portion of the webcast. An audio replay will be available from May 8th to May 16th by calling (855) 859-2056 (Domestic) or (404) 537-3406 (International), passcode #4465019

About Triumph Group

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.

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, 2018.

FINANCIAL DATA (UNAUDITED) ON FOLLOWING PAGES



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FINANCIAL DATA (UNAUDITED)

TRIUMPH GROUP, INC. AND SUBSIDIARIES
(in thousands, except per share data)
 
 
Three Months Ended
 
Twelve Months Ended
 
 
March 31,
 
March 31,
CONDENSED STATEMENTS OF INCOME
 
2019
 
2018*
 
2019
 
2018*
 
 
 
 
 
 
 
 
 
Net sales
 
$
869,027

 
$
896,860

 
$
3,364,930

 
$
3,198,951

 
 
 
 
 
 
 
 
 
Cost of sales (exclusive of depreciation shown below)
 
716,958

 
730,408

 
2,924,920

 
2,607,556

Selling, general and administrative
 
75,354

 
76,152

 
298,386

 
292,630

Depreciation and amortization
 
35,556

 
39,048

 
149,904

 
158,368

Impairment of intangible assets
 

 
345,000

 

 
535,227

Restructuring
 
12,892

 
6,319

 
31,098

 
40,069

Curtailment & settlements, net
 

 

 

 

Loss on divestiture
 
217,464

 
10,370

 
235,301

 
30,741

Operating loss
 
(189,197
)
 
(310,437
)
 
(274,679
)
 
(465,640
)
 
 
 
 
 
 
 
 
 
Interest expense and other
 
31,104

 
27,213

 
114,619

 
99,442

Non-service defined benefit income
 
(12,524
)
 
(30,477
)
 
(62,105
)
 
(103,234
)
Income tax expense (benefit)
 
(8,165
)
 
(2,343
)
 
(5,426
)
 
(36,457
)
 
 
 
 
 
 
 
 
 
Net loss
 
$
(199,612
)
 
$
(304,830
)
 
$
(321,767
)
 
$
(425,391
)
 
 
 
 
 
 
 
 
 
Earnings per share - basic:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
$
(4.01
)
 
$
(6.16
)
 
$
(6.47
)
 
$
(8.60
)
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic
 
49,774

 
49,488

 
49,698

 
49,442

 
 
 
 
 
 
 
 
 
Earnings per share - diluted:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
$
(4.01
)
 
$
(6.16
)
 
$
(6.47
)
 
$
(8.60
)
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - diluted
 
49,774

 
49,488

 
49,698

 
49,442

 
 
 
 
 
 
 
 
 
Dividends declared and paid per common share
 
$
0.04

 
$
0.04

 
$
0.16

 
$
0.16

* Adjusted for ASU 2017-07 (Pension)
 
 
 
 
 
 
 
 






(Continued)
 FINANCIAL DATA (UNAUDITED)
 
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except per share data)
 
BALANCE SHEET
 
Unaudited
 
Audited
 
 
March 31,
 
March 31,
 
 
2019
 
2018
Assets
 
 
 
 
Cash and cash equivalents
 
$
92,807

 
$
35,819

Accounts receivable, net
 
392,940

 
376,612

Contract assets
 
326,667

 
37,573

Inventories, net of unliquidated progress payments of $0 and $387,146
 
413,560

 
1,427,169

Prepaid and other current assets
 
34,446

 
44,428

Assets held for sale
 

 
1,324

   Current assets
 
1,260,420

 
1,922,925

 
 
 
 
 
Property and equipment, net
 
577,895

 
726,003

Goodwill
 
583,225

 
592,828

Intangible assets, net
 
430,954

 
507,681

Other, net
 
21,431

 
57,627

 
 
 
 
 
Total assets
 
$
2,873,925

 
$
3,807,064

 
 
 
 
 
Liabilities & Stockholders' Equity
 
 
 
 
Current portion of long-term debt
 
$
8,201

 
$
16,527

Accounts payable
 
433,783

 
418,367

Contract liabilities
 
313,069

 
321,191

Accrued expenses
 
239,572

 
235,914

Liabilities related to assets held for sale
 

 
440

   Current liabilities
 
994,625

 
992,439

 
 
 
 
 
Long-term debt, less current portion
 
1,480,620

 
1,421,757

Accrued pension and post-retirement benefits, noncurrent
 
540,479

 
483,887

Deferred income taxes, noncurrent
 
6,964

 
16,582

Other noncurrent liabilities
 
424,549

 
441,865

 
 
 
 
 
Stockholders' Equity:
 
 
 
 
Common stock, $.001 par value, 100,000,000 shares authorized, 52,460,920 and 52,460,920 shares issued; 49,887,268 and 49,669,848 shares outstanding
 
52

 
51

Capital in excess of par value
 
867,545

 
851,280

Treasury stock, at cost, 2,573,652 and 2,791,072 shares
 
(159,154
)
 
(179,082
)
Accumulated other comprehensive income
 
(487,683
)
 
(367,870
)
Retained earnings
 
(794,072
)
 
146,155

Total stockholders' equity
 
(573,312
)
 
450,534

 
 
 
 
 
Total liabilities and stockholders' equity
 
$
2,873,925

 
$
3,807,064

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(Continued)
 FINANCIAL DATA (UNAUDITED)
 
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except per share data)
 
Year ended March 31,
 
2019
 
2018
Operating Activities
 
 
 
Net loss
$
(321,767
)
 
$
(425,391
)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
 
 
 
Depreciation and amortization
149,904

 
158,368

Impairment of intangible assets

 
535,227

Amortization of acquired contract liability
(67,314
)
 
(125,148
)
Loss on divestiture and assets held for sale
235,301

 
30,741

Curtailments, settlements and early retirement incentives
4,165

 
(25,722
)
Other amortization included in interest expense
8,770

 
11,677

(Recovery) provision for doubtful accounts receivable
(495
)
 
(242
)
(Benefit) provision for deferred income taxes
(9,192
)
 
(43,108
)
Share-based compensation
10,291

 
7,949

Changes in other current assets and liabilities, excluding the effects of acquisitions:
 
 
 
Trade and other receivables
(109,078
)
 
(99,620
)
Contract assets
91,795

 
(5,484
)
Inventories
(49,134
)
 
(163,417
)
Prepaid expenses and other current assets
(3,144
)
 
(4,239
)
Accounts payable, accrued expenses and income taxes payable
(44,564
)
 
(43,696
)
Accrued pension and other postretirement benefits
(80,044
)
 
(88,464
)
Other
10,181

 
(8,325
)
Net cash (used in) provided by operating activities
(174,325
)
 
(288,894
)
Investing Activities
 
 
 
Capital expenditures
(47,099
)
 
(42,050
)
Proceeds from sale of assets
247,647

 
83,082

Acquisitions, net of cash acquired

 
(2,818
)
Net cash provided by (used in) investing activities
200,548

 
38,214

Financing Activities
 
 
 
Net increase (decrease) in revolving credit facility
102,113

 
82,888

Proceeds from issuance of long-term debt
54,600

 
544,243

Retirement of debt and capital lease obligations
(113,425
)
 
(387,373
)
Payment of deferred financing costs
(1,982
)
 
(17,729
)
Dividends paid
(8,066
)
 
(7,943
)
Net repayment of government grant

 

Repurchase of restricted shares for minimum tax obligations
(860
)
 
(483
)
Net cash provided by (used in) by financing activities
32,380

 
213,603

Effect of exchange rate changes on cash
(1,615
)
 
3,263

Net change in cash and cash equivalents
56,988

 
(33,814
)
Cash and cash equivalents at beginning of year
35,819

 
69,633

Cash and cash equivalents at end of year
$
92,807

 
$
35,819



(Continued)
 FINANCIAL DATA (UNAUDITED)
 





TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
 
SEGMENT DATA
 
Three Months Ended
 
Twelve Months Ended
 
 
 
March 31,
 
March 31,
 
 
 
2019
 
2018
 
2019
 
2018
 
Net Sales:
 
 
 
 
 
 
 
 
 
Integrated Systems
 
$
288,754

 
$
275,253

 
$
1,042,947

 
$
986,351

 
Aerospace Structures
 
511,314

 
550,371

 
2,062,404

 
1,954,729

 
Product Support
 
73,883

 
79,074

 
283,743

 
281,913

 
Elimination of inter-segment sales
 
(4,924
)
 
(7,838
)
 
(24,164
)
 
(24,042
)
 
 
 
$
869,027

 
$
896,860

 
$
3,364,930

 
$
3,198,951

 
 
 
 
 
 
 
 
 
 
 
Operating (Loss) Income:
 
 
 
 
 
 
 
 
 
Integrated Systems
 
$
42,394

 
$
54,562

 
$
157,615

 
$
185,401

 
Aerospace Structures
 
(264
)
 
(343,469
)
 
(152,407
)
 
(568,164
)
 
Product Support
 
12,876

 
13,633

 
43,479

 
45,702

 
Corporate
 
(244,203
)
 
(35,163
)
 
(323,366
)
 
(128,579
)
 
 
 
$
(189,197
)
 
$
(310,437
)
 
$
(274,679
)
 
$
(465,640
)
 
 
 
 
 
 
 
 
 
 
 
Operating Margin %
 
 
 
 
 
 
 
 
 
Integrated Systems
 
14.7
 %
 
19.8
 %
 
15.1
 %
 
18.8
 %
 
Aerospace Structures
 
(0.1
)%
 
(62.4
)%
 
(7.4
)%
 
(29.1
)%
 
Product Support
 
17.4
 %
 
17.2
 %
 
15.3
 %
 
16.2
 %
 
Consolidated
 
(21.8
)%
 
(34.6
)%
 
(8.2
)%
 
(14.6
)%
 
 
 
 
 
 
 
 
 
 
 
Depreciation and Amortization:
 
 
 
 
 
 
 
 
 
Integrated Systems
 
$
6,736

 
$
8,128

*
$
29,052

 
$
35,986

*
Aerospace Structures
 
26,543

*
373,444

*
111,431

*
649,013

*
Product Support
 
1,377

 
1,675

 
6,321

 
6,744

 
Corporate
 
900

 
801

 
3,100

 
1,852

 
 
 
$
35,556

 
$
384,048

 
$
149,904

 
$
693,595

 
 
 
 
 
 
 
 
 
 
 
Amortization of Acquired Contract Liabilities:
 
 
 
 
 
 
 
 
 
Integrated Systems
 
$
(8,332
)
 
$
(10,058
)
 
$
(34,121
)
 
$
(38,293
)
 
Aerospace Structures
 
(10,212
)
 
(23,228
)
 
(33,193
)
 
(86,855
)
 
 
 
$
(18,544
)
 
$
(33,286
)
 
$
(67,314
)
 
$
(125,148
)
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures:
 
 
 
 
 
 
 
 
 
Integrated Systems
 
$
3,022

 
$
223

 
$
12,410

 
$
6,146

 
Aerospace Structures
 
7,645

 
7,453

 
30,581

 
29,519

 
Product Support
 
1,453

 
577

 
3,324

 
2,206

 
Corporate
 
156

 
1,865

 
784

 
4,179

 
 
 
$
12,276

 
$
10,118

 
$
47,099

 
$
42,050

 
* - Includes Impairment Charges
 
 
 
 
 
 
 
 
 
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(Continued)
 FINANCIAL DATA (UNAUDITED)
 
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
 
 
Non-GAAP Financial Measure Disclosures
 
We prepare and publicly release quarterly unaudited financial statements prepared in accordance with GAAP. In accordance with the Securities and Exchange Commission (“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 measures that we disclose are Adjusted EBITDA and Adjusted EBITDAP. Adjusted EBITDA is our net income before interest, income taxes, amortization of acquired contract liabilities, curtailments, settlements and early retirement incentives, legal settlements, depreciation and amortization. Adjusted EBITDAP is Adjusted EBITDA less pension & other post-retirement benefits. We disclose Adjusted EBITDA and Adjusted EBITDAP on a consolidated basis and Adjusted EBITDAP on 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 measures 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 measures, 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.
 
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 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 disclosures of Adjusted EBITDA and Adjusted EBITDAP help 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 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 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.







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

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) 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 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.







(Continued)
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
 
Twelve Months Ended
 
 
March 31,
 
March 31,
 
 
2019
 
2018
 
2019
 
2018
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA):
 
 
 
 
 
 
 
 
Net Loss
 
$
(199,612
)
 
$
(304,830
)
 
$
(321,767
)
 
$
(425,391
)
 
 
 
 
 
 
 
 
 
Add-back:
 
 
 
 
 
 
 
 
     Income tax (benefit) expense
 
(8,165
)
 
(2,343
)
 
(5,426
)
 
(36,457
)
     Interest expense and other
 
31,104

 
27,213

 
114,619

 
99,442

  Curtailment & settlement (gain)/loss, net
 
4,165

 
(11,146
)
 
4,165

 
(25,722
)
Loss on divestitures
 
217,464

 
10,370

 
235,301

 
30,741

Adoption of ASU 2017-07
 

 

 
87,241

 

     Amortization of acquired contract liabilities
 
(18,544
)
 
(33,286
)
 
(67,314
)
 
(125,148
)
     Depreciation and amortization
 
35,556

 
384,048

 
149,904

 
693,595

 
 
 
 
 
 
 
 
 
Adjusted Earnings (Loss) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")
 
$
61,968

 
$
70,026

 
$
196,723

 
$
211,060

 
 
 
 
 
 
 
 
 
Non-service defined benefit income (excluding settlements)
 
(16,689
)
 
(19,331
)
 
(66,270
)
 
(77,512
)
 
 
 
 
 
 
 
 
 
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization, and Pension ("Adjusted EBITDAP")
 
$
45,279

 
$
50,695

 
$
130,453

 
$
133,548

 
 
 
 
 
 
 
 
 
Net sales #
 
$
869,027

 
$
896,860

 
$
3,364,930

 
$
3,198,951

 
 
 
 
 
 
 
 
 
Net Loss Margin
 
(23.0)%
 
(34.0)%
 
(9.6)%
 
(13.3)%
 
 

 

 

 

Adjusted EBITDAP Margin
 
5.3
%
 
5.9
%
 
4.0
%
 
4.3
%

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

 
 
Three Months Ended March 31, 2019
 
 
 
 
 
Segment Data
 
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDAP):
 
Total
 
Integrated Systems
 
Aerospace Structures
 
Product Support
 
Corporate/Eliminations
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Loss
 
$
(199,612
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Add-back:
 
 
 
 
 
 
 
 
 
 
 
Non-service defined benefit income
 
(12,524
)
 
 
 
 
 
 
 
 
 
Income tax benefit
 
(8,165
)
 
 
 
 
 
 
 
 
 
Interest expense and other
 
31,104

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating (Loss) Income
 
$
(189,197
)
 
$
42,394

 
$
(264
)
 
$
12,876

 
$
(244,203
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss on divestitures
 
217,464

 

 

 

 
217,464

 
Amortization of acquired contract liabilities
 
(18,544
)
 
(8,332
)
 
(10,212
)
 

 

 
Depreciation and amortization
 
35,556

 
6,736

 
26,543

 
1,377

 
900

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDAP")
 
$
45,279

 
$
40,798

 
$
16,067

 
$
14,253

 
$
(25,839
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
869,027

 
$
288,754

 
$
511,314

 
$
73,883

 
$
(4,924
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDAP Margin
 
5.3%
 
14.5%
 
3.2%
 
19.3%
 
n/a
 



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

 
 
Twelve Months Ended March 31, 2019
 
 
 
 
 
Segment Data
 
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA):
 
Total
 
Integrated Systems
 
Aerospace Structures
 
Product Support
 
Corporate/Eliminations
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Loss
 
$
(321,767
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Add-back:
 
 
 
 
 
 
 
 
 
 
 
Non-service defined benefit income
 
(62,105
)
 
 
 
 
 
 
 
 
 
Income tax benefit
 
(5,426
)
 
 
 
 
 
 
 
 
 
Interest expense and other
 
114,619

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating (Loss) Income
 
$
(274,679
)
 
$
157,615

 
$
(152,407
)
 
$
43,479

 
$
(323,366
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss on divestitures
 
235,301

 

 

 

 
235,301

 
Adoption of ASU 2017-07
 
87,241

 

 
87,241

 

 

 
Amortization of acquired contract liabilities
 
(67,314
)
 
(34,121
)
 
(33,193
)
 

 

 
Depreciation and amortization
 
149,904

 
29,052

 
111,431

 
6,321

 
3,100

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDAP")
 
$
130,453

 
$
152,546

 
$
13,072

 
$
49,800

 
$
(84,965
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
3,364,930

 
$
1,042,947

 
$
2,062,404

 
$
283,743

 
$
(24,164
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDAP Margin
 
4.0%
 
15.1%
 
0.6%
 
17.6%
 
n/a
 

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


 
 
Three Months Ended March 31, 2018
 
 
 
 
 
Segment Data
 
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA):
 
Total
 
Integrated Systems
 
Aerospace Structures
 
Product Support
 
Corporate/Eliminations
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Loss
 
$
(304,830
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Add-back:
 
 
 
 
 
 
 
 
 
 
 
Non-service defined benefit income
 
(30,477
)
 
 
 
 
 
 
 
 
 
Income tax benefit
 
(2,343
)
 
 
 
 
 
 
 
 
 
Interest expense and other
 
27,213

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating (Loss) Income
 
$
(310,437
)
 
$
54,562

 
$
(343,469
)
 
$
13,633

 
$
(35,163
)
 
Loss on divestitures
 
10,370

 

 

 

 
10,370

 
Amortization of acquired contract liabilities
 
(33,286
)
 
(10,058
)
 
(23,228
)
 

 

 
Depreciation and amortization
 
384,048

 
8,128

 
373,444

 
1,675

 
801

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Earnings (Losses). before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDAP")
 
$
50,695

 
$
52,632

 
$
6,747

 
$
15,308

 
$
(23,992
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
896,860

 
$
275,253

 
$
550,371

 
$
79,074

 
$
(7,838
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin
 
5.9%
 
19.8%
 
1.3%
 
19.4%
 
n/a
 

-More-




















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


 
 
Twelve Months Ended March 31, 2018
 
 
 
 
 
Segment Data
 
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA):
 
Total
 
Integrated Systems
 
Aerospace Structures
 
Product Support
 
Corporate/Eliminations
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Loss
 
$
(425,391
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Add-back:
 
 
 
 
 
 
 
 
 
 
 
Non-service defined benefit income
 
(103,234
)
 
 
 
 
 
 
 
 
 
Income tax expense
 
(36,457
)
 
 
 
 
 
 
 
 
 
Interest expense and other
 
99,442

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income (Loss)
 
$
(465,640
)
 
$
185,401

 
$
(568,164
)
 
$
45,702

 
$
(128,579
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss on divestiture
 
30,741

 

 

 

 
30,741

 
Amortization of acquired contract liabilities
 
(125,148
)
 
(38,293
)
 
(86,855
)
 

 

 
Depreciation and amortization
 
693,595

 
35,986

 
649,013

 
6,744

 
1,852

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted (Losses) Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")
 
$
133,548

 
$
183,094

 
$
(6,006
)
 
$
52,446

 
$
(95,986
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
3,198,951

 
$
986,351

 
$
1,954,729

 
$
281,913

 
$
(24,042
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin
 
4.3%
 
19.3%
 
(0.3)%
 
18.6%
 
n/a
 

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

Adjusted income from continuing operations, before income taxes, adjusted income from continuing operations and adjusted income from continuing operations per diluted share, before non-recurring costs has been provided for consistency and comparability. These measures should not be considered in isolation or as alternatives to income from continuing operations before income taxes, income from continuing operations and income from continuing operations per diluted share presented in accordance with GAAP. The following tables reconcile income from continuing operations before income taxes, income from continuing operations, and income from continuing operations per diluted share, before non-recurring costs
 
 
Three Months Ended
 
 
 
March 31, 2019
 
 
 
Pre-Tax
 
After-Tax
 
Diluted EPS
 
Loss from Continuing Operations - GAAP
 
$
(207,777
)
 
$
(199,612
)
 
$
(4.01
)
 
Adjustments:
 
 
 
 
 
 
 
Loss on divestitures
 
217,464

 
217,464

 
4.37

 
Curtailment & settlement, net
 
4,165

 
4,165

 
0.08

 
E2 Jet program forward loss reduction
 
(3,700
)
 
(3,700
)
 
(0.07
)
 
G280 program forward loss charge
 
26,548

 
26,548

 
0.53

 
Restructuring costs
 
12,892

 
12,892

 
0.26

 
Adjusted Income from Continuing Operations - non-GAAP
 
$
49,592

 
$
57,757

 
$
1.15

*
 
 
 
 
 
 
 
 

 
 
Twelve Months Ended
 
 
 
March 31, 2019
 
 
 
Pre-Tax
 
After-Tax
 
Diluted EPS
 
Loss from Continuing Operations - GAAP
 
$
(327,193
)
 
$
(321,767
)
 
$
(6.47
)
 
Adjustments:
 
 
 
 
 
 
 
Adoption of ASU 2017-07
 
87,241

 
87,241

 
1.76

 
Loss on divestitures
 
235,301

 
235,301

 
4.73

 
Curtailment & settlement, net
 
4,165

 
4,165

 
0.08

 
Global 7500 forward loss charge
 
60,424

 
60,424

 
1.21

 
E2 Jet program forward loss charge
 
5,462

 
5,462

 
0.11

 
G280 program forward loss charge
 
29,064

 
29,064

 
0.58

 
Reduction of prior Gulfstream forward loss
 
(7,624
)
 
(7,624
)
 
(0.15
)
 
Restructuring costs
 
31,098

 
31,098

 
0.62

 
Refinancing costs
 
1,281

 
1,281

 
0.03

 
Adjusted Income from Continuing Operations - non-GAAP
 
$
119,219

 
$
124,645

 
$
2.49

*
 
 
 
 
 
 
 
 
         * Difference due to rounding
 
 
 
 
 
 
 
-More-







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

 
 
Three Months Ended
 
 
 
March 31, 2018
 
 
 
Pre-Tax
 
After-Tax
 
Diluted EPS
 
Loss from Continuing Operations - GAAP
 
$
(307,203
)
 
$
(304,860
)
 
$
(6.16
)
 
Adjustments:
 
 
 
 
 
 
 
Goodwill Impairment
 
345,000

 
341,970

 
6.91

 
Loss on divestitures
 
10,370

 
10,370

 
0.21

 
Curtailment & settlement, net
 
(11,146
)
 
(8,694
)
 
(0.17
)
 
Restructuring costs (non-cash)
 
467

 
364

 
0.01

 
Restructuring costs (cash)
 
6,319

 
4,929

 
0.10

 
Adjusted Income from Continuing Operations - non-GAAP
 
$
43,807

 
$
44,079

 
$
0.89

*
 
 
 
 
 
 
 
 
         * Difference due to rounding
 
 
 
 
 
 
 

 
 
Twelve Months Ended
 
 
 
March 31, 2018
 
 
 
Pre-Tax
 
After-Tax
 
Diluted EPS
 
Loss from Continuing Operations - GAAP
 
$
(461,848
)
 
$
(425,391
)
 
$
(8.60
)
 
Adjustments:
 
 
 
 
 
 
 
Goodwill Impairment
 
535,227

 
523,510

 
10.59

 
Loss on divestitures
 
30,741

 
30,741

 
0.62

 
Curtailment & settlement, net
 
(25,722
)
 
(17,491
)
 
(0.35
)
 
Refinancing costs
 
1,986

 
1,350

 
0.03

 
Restructuring costs (non-cash)
 
3,005

 
2,043

 
0.04

 
Restructuring costs (cash)
 
40,069

 
27,247

 
0.55

 
Estimated impact of Tax Reform
 

 
(22,398
)
 
(0.45
)
 
Adjusted Income from Continuing Operations - non-GAAP
 
$
123,458

 
$
119,611

 
$
2.41

*
 
 
 
 
 
 
 
 
         * Difference due to rounding
 
 
 
 
 
 
 

-More-






 FINANCIAL DATA (UNAUDITED)
 
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
 
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
 
Twelve Months Ended
 
 
March 31,
 
March 31,
 
 
2019
 
2018
 
2019
 
2018
Operating (loss) income - GAAP
 
$
(189,197
)
 
$
(310,437
)
 
$
(274,679
)
 
$
(465,640
)
Adjustments:
 
 
 
 
 
 
 
 
Goodwill & tradename impairments
 

 
345,000

 
87,241

 
535,227

Restructuring costs (non-cash)
 

 
467

 

 
3,005

Restructuring costs (cash)
 
12,892

 
6,319

 
31,098

 
40,069

Loss on divestitures
 
217,464

 
10,370

 
235,301

 
30,741

Forward loss charges, net
 
22,848

 

 
87,326

 

Adjusted Operating income - non-GAAP
 
$
64,007

 
$
51,719

 
$
166,287

 
$