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Section 1: 8-K (8-K, DATED JULY 31, 2019)

Document


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): July 31, 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))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $.001 per share
TGI
New York Stock Exchange
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 July 31, 2019, Triumph Group, Inc. issued a press release announcing its financial results for the fiscal quarter ended June 30, 2019, and conducted 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 9.01
 
Financial Statements and Exhibits.
 
 
 
(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:
July 31, 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 JULY 31, 2019)

Exhibit


Exhibit 99.1
399000121_imageq4fya15.jpg    

NEWS RELEASE
Media Contact:
Michele Long
Phone (610) 251-1000
 
 
 
Investor Relations Contact:
Mike Pici
Phone (610) 251-1000


TRIUMPH GROUP REPORTS FIRST QUARTER FISCAL 2020 RESULTS

Reports Organic Revenue Growth of 6%

Maintains Fiscal Year 2020 Guidance including Positive Free Cash Flow

BERWYN, Pa. - July 31, 2019 - Triumph Group, Inc. (NYSE: TGI) (“Triumph” or the “Company”) today reported financial results for its first quarter of fiscal year 2020, which ended June 30, 2019.

First Quarter Fiscal 2020

Net sales of $730.2 million
Operating income of $35.5 million with operating margin of 5%; adjusted operating income of $41.6 million with adjusted operating margin of 6%
Net income of $18.1 million, or $0.36 per share; adjusted net income of $22.9 million, or $0.46 per diluted share
Cash flow from operations of $5.0 million, and free cash flow use was ($3.1) 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

“Triumph Group had a strong start to our fiscal 2020,” stated Daniel J. Crowley, Triumph’s president and chief executive officer. “During our fiscal first quarter, all three of our business segments delivered year-over-year organic growth in net sales, with our Product Support segment posting organic sales growth for the sixth consecutive quarter. Additionally, Product Support and Aerospace Structures generated strong year-over-year organic improvement in operating margin. We see significant opportunity for margin expansion in Integrated Systems over the balance of the year.”

Mr. Crowley continued, “Our first quarter cash usage represents a significant improvement over the prior year and establishes a solid start to the year. We expect to be cash flow positive in the second half of the year as the benefits of our Path to Value actions come to fruition. The Boeing 737 MAX delays are currently forecasted to impact Triumph revenue by less than 2% in the year with offsetting actions in progress. Given

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our solid first quarter results coupled with the enhanced level of visibility and stability we’ve instilled across our operations, we remain confident with our full-year commitments and guidance.”

Mr. Crowley concluded, “Triumph is a healthier and better performing company than it was a year ago. While we still have work to accomplish, we’re confident that we are well positioned to deliver predictable results and increased shareholder value.”

First Quarter Fiscal Year 2020 Overview

After accounting for divestitures, sales for the first quarter of fiscal 2020 were up 5.8% organically from the comparable prior year period. Growth was driven by increased volumes on engine and military rotorcraft components, aftermarket accessory services, and continuing structures programs and new engineering services.

First quarter operating income of $35.5 million included a $3.1 million adjustment for loss on previous divestitures and $3.0 million of restructuring costs. Net income for the first quarter of fiscal year 2020 was $18.1 million, or $0.36 per share. On an adjusted basis, net income was $22.9 million, or $0.46 per diluted share. Triumph’s results included the following:
($ millions except EPS)
 
      Pre-tax
 
    After-tax
 
Diluted EPS
 
Income from Continuing Operations - GAAP
 
$
22.9

 
$
18.1

 
$
0.36

 
 
 
 
 
 
 
 
 
Loss on divestitures
 
3.1

 
2.5

 
0.05

 
Transformation related costs:
 
 
 
 
 
 
 
Restructuring costs (cash)
 
3.0

 
2.3

 
0.05

 
 
 
 
 
 
 
 
 
Adjusted Income from Continuing Operations - non-GAAP
 
$
29.0

 
$
22.9

 
$
0.46

 
 
 
 
 
 
 
 
 

The number of shares used in computing diluted earnings per share for the first quarter of 2020 was 50.3 million.

Backlog was $3.7 billion and increased 1% organically compared to the prior year period and is flat on a sequential basis. This reflects growth in Integrated Systems partially offset by sunsetting legacy Aerospace Structures programs.

For the three-months ended June 30, 2019, cash flow from operations was $5.0 million, reflecting continued investment in ramping programs and liquidation of approximately $20.0 million in prior period advances against current period deliveries.

Outlook

Based on anticipated aircraft production rates and including the impacts of pending program transfers, the Company continues to expect 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.


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


Conference Call

Triumph Group will hold a conference call today, July 31st at 8:30 a.m. (ET) to discuss the first quarter fiscal year 2020 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, which presentation has been posted on the Company’s website at
http://ir.triumphgroup.com/QuarterlyResults. An audio replay will be available from July 31st to August 8th by calling (855) 859-2056 (Domestic) or (404) 537-3406 (International), passcode #4958108.

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, 2019.

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
 
June 30,
CONDENSED STATEMENTS OF INCOME
2019
 
2018
 
 
 
 
Net sales
$
730,231

 
$
832,900

 
 
 
 
Cost of sales (excluding depreciation shown below)
582,233

 
770,214

Selling, general & administrative expenses
62,337

 
81,656

Depreciation & amortization expense
44,050

 
38,812

Restructuring expenses
2,964

 
4,047

Loss on divestitures
3,136

 
4,719

Operating income (loss)
35,511

 
(66,548
)
 
 
 
 
Interest expense and other
27,491

 
25,493

Non-service defined benefit income
(14,875
)
 
(16,538
)
Income tax expense
4,807

 
1,031

 
 
 
 
Net income (loss)
$
18,088

 
$
(76,534
)
 
 
 
 
Earnings per share - basic:
 
 
 
 
 
 
 
Net income (loss)
$
0.36

 
$
(1.54
)
 
 
 
 
Weighted average common shares outstanding - basic
49,854

 
49,552

 
 
 
 
Earnings per share - diluted:
 
 
 
 
 
 
 
Net income (loss)
$
0.36

 
$
(1.54
)
 
 
 
 
Weighted average common shares outstanding - diluted
50,295

 
49,552

 
 
 
 
Dividends declared and paid per common share
$
0.04

 
$
0.04








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(Continued)
 FINANCIAL DATA (UNAUDITED)
 
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except share data)
 
BALANCE SHEET
 
Unaudited
 
Audited
 
 
June 30,
 
March 31,
 
 
2019
 
2019
Assets
 
 
 
 
Cash and cash equivalents
 
$
28,927

 
$
92,807

Accounts receivable, net
 
331,509

 
373,590

Contract assets
 
323,869

 
326,667

Inventory, net
 
470,448

 
413,560

Prepaid and other current assets
 
23,907

 
34,446

   Current assets
 
1,178,660

 
1,241,070

 
 
 
 
 
Property and equipment, net
 
515,212

 
543,710

Goodwill
 
581,631

 
583,225

Intangible assets, net
 
418,494

 
430,954

Other, net
 
129,269

 
55,615

 
 
 
 
 
Total assets
 
$
2,823,266

 
$
2,854,574

 
 
 
 
 
Liabilities & Stockholders' Deficit
 
 
 
 
Current portion of long-term debt
 
$
8,150

 
$
8,201

Accounts payable
 
426,587

 
433,783

Contract liabilities
 
309,985

 
293,719

Accrued expenses
 
225,666

 
239,572

Current liabilities
 
970,388

 
975,275

 
 
 
 
 
Long-term debt, less current portion
 
1,427,419

 
1,480,620

Accrued pension and post-retirement benefits, noncurrent
 
522,916

 
540,479

Deferred income taxes, noncurrent
 
10,989

 
6,964

Other noncurrent liabilities
 
449,473

 
424,549

 
 
 
 
 
Stockholders' Deficit:
 
 
 
 
Common stock, $.001 par value, 100,000,000 shares authorized, 52,460,920 and 52,460,920 shares issued
 
52

 
52

Capital in excess of par value
 
859,280

 
867,545

Treasury stock, at cost, 2,455,767 and 2,573,652 shares
 
(149,767
)
 
(159,154
)
Accumulated other comprehensive loss
 
(489,277
)
 
(487,684
)
Accumulated deficit
 
(778,207
)
 
(794,072
)
Total stockholders' deficit
 
(557,919
)
 
(573,313
)
 
 
 
 
 
Total liabilities and stockholders' deficit
 
$
2,823,266

 
$
2,854,574




5



(Continued)
 FINANCIAL DATA (UNAUDITED)
 
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except share data)
 
CASH FLOWS
Three Months Ended June 30,
 
2019
 
2018
 
 
 
 
Operating Activities
 
 
 
Net income (loss)
$
18,088

 
$
(76,534
)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 
 
Depreciation & amortization
44,050

 
38,812

Amortization of acquired contract liabilities
(16,939
)
 
(17,234
)
Loss on divestitures & assets held for sale
3,136

 
4,719

Other amortization included in interest expense
1,958

 
1,887

Provision for (recovery of) doubtful accounts receivable
671

 
(14
)
Employee stock compensation
2,426

 
2,462

Changes in assets and liabilities, excluding the effects of acquisitions/divestitures:
 
 
 
Trade and other receivables
41,247

 
27,598

Contract assets
2,767

 
(23,221
)
Inventories
(56,623
)
 
(30,833
)
Prepaid expenses and other current assets
12,721

 
3,898

Accounts payable, accrued expenses and contract liabilities
(32,119
)
 
23,341

Accrued pension and other postretirement benefits
(15,792
)
 
(18,691
)
Other
(573
)
 
(1,904
)
Net cash provided by (used in) operating activities
5,018

 
(65,714
)
Investing Activities
 
 
 
Capital expenditures
(8,090
)
 
(12,200
)
Proceeds from sale of assets
(2,570
)
 
664

Net cash used in investing activities
(10,660
)
 
(11,536
)
Financing Activities
 
 
 
Net increase in revolving credit facility
(30,000
)
 
113,186

Proceeds from issuance of long-term debt and capital leases
5,600

 
19,046

Repayment of debt and capital lease obligations
(30,572
)
 
(53,762
)
Payment of deferred financing costs
(104
)
 
(64
)
Dividends paid
(1,998
)
 
(1,988
)
Repurchase of restricted shares for minimum tax obligation
(1,043
)
 
(532
)
Net cash (used in) provided by financing activities
(58,117
)
 
75,886

Effect of exchange rate changes on cash
(121
)
 
(1,400
)
Net change in cash
(63,880
)
 
(2,764
)
Cash and equivalents at beginning of period
92,807

 
35,819

Cash and equivalents at end of period
$
28,927

 
$
33,055


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(Continued)
 FINANCIAL DATA (UNAUDITED)
 
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
SEGMENT DATA
Three Months Ended
 
June 30,
 
2019
 
2018
Net sales:
 
 
 
Integrated Systems
$
252,226

 
$
241,039

Aerospace Structures
419,178

 
532,387

Product Support
61,756

 
66,215

Elimination of inter-segment sales
(2,929
)
 
(6,741
)
 
$
730,231

 
$
832,900

 
 
 
 
Operating income (loss):
 
 
 
Integrated Systems
$
34,772

 
$
35,409

Aerospace Structures
12,283

 
(79,587
)
Product Support
9,276

 
7,669

Corporate
(18,394
)
 
(27,577
)
Share-based compensation expense
(2,426
)
 
(2,462
)
 
$
35,511

 
$
(66,548
)
 
 
 
 
Operating Margin %
 
 
 
Integrated Systems
13.8
%
 
14.7
 %
Aerospace Structures
2.9
%
 
(14.9
)%
Product Support
15.0
%
 
11.6
 %
Consolidated
4.9
%
 
(8.0
)%
 
 
 
 
Depreciation and amortization:
 
 
 
Integrated Systems
$
7,067

 
$
7,555

Aerospace Structures
35,059

 
28,920

Product Support
1,090

 
1,670

Corporate
834

 
667

 
$
44,050

 
$
38,812

 
 
 
 
Amortization of acquired contract liabilities:
 
 
 
Integrated Systems
$
(8,125
)
 
$
(8,849
)
Aerospace Structures
(8,814
)
 
(8,385
)
 
$
(16,939
)
 
$
(17,234
)
 
 
 
 
Capital expenditures:
 
 
 
Integrated Systems
$
2,851

 
$
1,609

Aerospace Structures
3,973

 
10,138

Product Support
1,033

 
348

Corporate
233

 
105

 
$
8,090

 
$
12,200



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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.



8



(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.



9



(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
 
June 30,
 
2019
 
2018
Adjusted Earnings before Interest, Taxes, Depreciation, Amortization, and Pension (Adjusted EBITDAP):
 
 
 
Net Income (Loss)
$
18,088

 
$
(76,534
)
 
 
 
 
Add-back:
 
 
 
     Income tax expense
4,807

 
1,031

     Interest expense and other
27,491

 
25,493

   Loss on divestitures
3,136

 
4,719

Adoption of ASU 2017-07

 
87,241

     Amortization of acquired contract liabilities
(16,939
)
 
(17,234
)
     Depreciation and amortization
44,050

 
38,812

 
 
 
 
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")
$
80,633

 
$
63,528

 
 
 
 
Non-service defined benefit income (excluding settlements)
(14,875
)
 
(16,538
)
 
 
 
 
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization, and Pension ("Adjusted EBITDAP")
$
65,758

 
$
46,990

 
 
 
 
Net Sales
$
730,231

 
$
832,900

 
 
 
 
Net Income (Loss) Margin
2.5
%
 
(9.2
)%
 
 
 
 
Adjusted EBITDAP Margin
9.2
%
 
5.8
 %




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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 June 30, 2019
 
 
 
 
Segment Data
Adjusted Earnings before Interest, Taxes, Depreciation, Amortization, and Pension (EBITDAP):
 
Total
 
Integrated Systems
 
Aerospace Structures
 
Product Support
 
Corporate/Eliminations*
 
 
 
 
 
 
 
 
 
 
 
Net Income
 
$
18,088

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Add-back:
 
 
 
 
 
 
 
 
 
 
Non-service defined benefit income
 
(14,875
)
 
 
 
 
 
 
 
 
Income tax expense
 
4,807

 
 
 
 
 
 
 
 
Interest expense and other
 
27,491

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income (Loss)
 
$
35,511

 
$
34,772

 
$
12,283

 
$
9,276

 
$
(20,820
)
Loss on divestitures
 
3,136

 

 

 

 
3,136

Amortization of acquired contract liabilities
 
(16,939
)
 
(8,125
)
 
(8,814
)
 

 

Depreciation and amortization
 
44,050

 
7,067

 
35,059

 
1,090

 
834

 
 
 
 
 
 
 
 
 
 
 
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization, and Pension ("Adjusted EBITDAP")
 
$
65,758

 
$
33,714

 
$
38,528

 
$
10,366

 
$
(16,850
)
 
 
 
 
 
 
 
 
 
 
 
Net Sales
 
$
730,231

 
$
252,226

 
$
419,178

 
$
61,756

 
$
(2,929
)
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDAP Margin
 
9.2
%
 
13.8
%
 
9.4
%
 
16.8
%
 
n/a
 
 
Three Months Ended June 30, 2018
 
 
 
 
Segment Data
Adjusted Earnings before Interest, Taxes, Depreciation, Amortization, and Pension (EBITDAP):
 
Total
 
Integrated Systems
 
Aerospace Structures
 
Product Support
 
Corporate/Eliminations*
 
 
 
 
 
 
 
 
 
 
 
Net Loss
 
$
(76,534
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Add-back:
 
 
 
 
 
 
 
 
 
 
Non-service defined benefit income
 
(16,538
)
 
 
 
 
 
 
 
 
Income Tax Expense
 
1,031

 
 
 
 
 
 
 
 
Interest Expense and Other
 
25,493

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating (Loss) Income
 
$
(66,548
)
 
$
35,409

 
$
(79,587
)
 
$
7,669

 
$
(30,039
)
Loss on divestitures
 
4,719

 

 

 

 
4,719

Adoption of ASU 2017-07
 
87,241

 

 
87,241

 

 

Amortization of acquired contract liabilities
 
(17,234
)
 
(8,849
)
 
(8,385
)
 

 

Depreciation and amortization
 
38,812

 
7,555

 
28,920

 
1,670

 
667

 
 
 
 
 
 
 
 
 
 
 
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization, and Pension ("Adjusted EBITDAP")
 
$
46,990

 
$
34,115

 
$
28,189

 
$
9,339

 
$
(24,653
)
 
 
 
 
 
 
 
 
 
 
 
Net Sales
 
$
832,900

 
$
241,039

 
$
532,387

 
$
66,215

 
$
(6,741
)
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDAP Margin
 
5.8
%
 
14.7
%
 
5.4
%
 
14.1
%
 
n/a
* Operating loss at Corporate includes share-based compensation expense.

11





12



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

Adjusted income from continuing operations, before income taxes, adjusted income from continuing operations and adjusted income from continuing operations per diluted share, before non-recurring costs have been provided for consistency and comparability. These measures should not be considered in isolation or as alternatives to income from continuing operations before income taxes, income from continuing operations and income from continuing operations per diluted share presented in accordance with GAAP. The following tables reconcile income from continuing operations before income taxes, income from continuing operations, and income from continuing operations per diluted share, before non-recurring costs.

 
 
Three Months Ended
 
 
June 30, 2019
 
 
Pre-Tax
 
After-Tax
 
Diluted EPS
Loss from Continuing Operations - GAAP
 
$
22,895

 
$
18,088

 
$
0.36

Adjustments:
 
 
 
 
 
 
Loss on divestitures - incurred to date
 
3,136

 
2,477

 
0.05

Restructuring costs - incurred to date
 
2,964

 
2,342

 
0.05

Adjusted Income from Continuing Operations - non-GAAP
 
$
28,995

 
$
22,907

 
$
0.46


 
 
Three Months Ended
 
 
June 30, 2018
 
 
Pre-Tax
 
After-Tax
 
Diluted EPS
Loss from Continuing Operations - GAAP
 
$
(75,503
)
 
$
(76,534
)
 
$
(1.54
)
Adjustments:
 
 
 
 
 
 
Adoption of ASU 2017-07
 
87,241

 
85,474

 
1.72

Loss on divestitures
 
4,719

 
4,719

 
0.09

Restructuring costs (cash)
 
4,047

 
3,359

 
0.07

Adjusted Income from Continuing Operations - non-GAAP
 
$
20,504

 
$
17,018

 
$
0.34



13



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

Adjusted Operating Income is defined as GAAP Operating Income, less expenses/gains associated with the Company's transformation, such as restructuring expenses, gains/losses on divestitures, defined benefit plan gains/losses from curtailments, settlements, etc; impairments of goodwill and other assets. Management believes that this is useful in evaluating operating performance, but this measure should not be used in isolation. The following table reconciles our Operating income to Adjusted Operating income as noted above.

 
Three Months Ended
 
June 30, 2019
 
June 30, 2018
Operating Income - GAAP
$
35,511

 
$
(66,548
)
 
 
 
 
Adjustments:
 
 
 
Adoption of ASU 2017-07

 
87,241

Restructuring costs (cash)
2,964

 
4,047

Loss on divestitures
3,136

 
4,719

Adjusted Operating Income - non-GAAP
$
41,611

 
$
29,459


14



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

Cash provided by operations, is provided for consistency and comparability. We also use free cash flow as a key factor in planning for and consideration of strategic acquisitions and the repayment of debt. This measure should not be considered in isolation, as a measure of residual cash flow available for discretionary purposes, or as an alternative to operating results presented in accordance with GAAP. The following table reconciles cash provided by operations to free cash flow.

 
 
Three Months Ended
 
 
June 30,
 
 
2019
 
2018
Cash flow provided by (used in) operations
 
$
5,018

 
$
(65,714
)
Less:
 
 
 
 
Capital expenditures
 
(8,090
)
 
(12,200
)
Free cash use
 
$
(3,072
)
 
$
(77,914
)
 
 
 
 
 


The Company provides cash flow guidance on non-GAAP basis adjusting capital expenditures from cash from operations to arrive at free cash flow. The following table reconciles cash from operations on a GAAP basis to free cash flow guidance.
 
 
 
 
 
 
 
 
 
 
 
 
 
FY19 Cash Flow Guidance Range
Cash flow from operations
$50,000 - $110,000
Less:
 
 
 
 
 
Capital expenditures
$50,000 - $60,000
Free cash flow
$0 - $50,000

15
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