Securities and Exchange Commission

Washington, D.C. 20549

For the Quarterly Period Ended~~December 31, 2017~~


☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period From _________ to ________

Commission File Number:1-12235

(Registrant's telephone number, including area code)

Non-accelerated filero ~~(Do not check if a smaller reporting company)~~

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

☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes o☐ No x

☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

The number of outstanding shares of the Registrant's Common Stock, par value ~~$0.001~~$.001 per share, ~~49,672,041 shares outstanding as~~on August 7, 2023, was 76,713,281.

Table of ~~February 6, 2018.~~

Contents

TRIUMPH GROUP, INC.

Condensed Co~~nsolidated~~Consolidated Balance Sheets at ~~December 31, 2017~~June 30, 2023 and March 31, ~~2017~~

Condensed Consolidated Statements of Comprehensive ~~Income~~
Loss - Three ~~and nine~~ months ended ~~December 31, 2017~~June 30, 2023 and ~~2016~~

~~Nine~~Flows - Three months ended ~~December 31, 2017~~June 30, 2023 and ~~2016~~

~~Part I. Financial Information~~

~~Item 1. Financial Statements.~~

~~Triumph Group, Inc.~~

TRIUMPH GROUP, INC.

Condensed Consolidated Balance Sheets

(unaudited)

(~~dollars~~Dollars in thousands, except per share data)

~~SEE ACCOMPANYING NOTES.~~


	June 30,			March 31,
	2023			2023
ASSETS
Current assets:
Cash and cash equivalents	$	146,318		$	227,403
Trade and other receivables, less allowance for credit losses of $8,592 and $8,382		158,637			196,775
Contract assets		112,657			103,027
Inventory, net		429,386			389,245
Prepaid expenses and other current assets		19,716			17,062
Total current assets		866,714			933,512
Property and equipment, net		168,437			166,800
Goodwill		510,855			509,449
Intangible assets, net		71,737			73,898
Other, net		32,115			31,185
Total assets	$	1,649,858		$	1,714,844
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current portion of long-term debt	$	3,313		$	3,162
Accounts payable		152,905			197,932
Contract liabilities		47,882			44,482
Accrued expenses		144,266			151,348
Total current liabilities		348,366			396,924
Long-term debt, less current portion		1,674,389			1,688,620
Accrued pension and other postretirement benefits		314,154			359,375
Deferred income taxes		7,444			7,268
Other noncurrent liabilities		57,369			60,053
Stockholders' deficit:
Common stock, $.001 par value, 100,000,000 shares authorized, 69,964,040 and 65,432,589 shares issued and outstanding		70			65
Capital in excess of par value		1,019,891			964,741
Accumulated other comprehensive loss		(546,106	)		(554,646	)
Accumulated deficit		(1,225,719	)		(1,207,556	)
Total stockholders' deficit		(751,864	)		(797,396	)
Total liabilities and stockholders' deficit	$	1,649,858		$	1,714,844

See accompanying notes to condensed consolidated financial statements.

~~Triumph Group, Inc.~~

TRIUMPH GROUP, INC.

Condensed Consolidated Statements of Operations

(unaudited)

(Dollars in thousands, except per share data)

~~SEE ACCOMPANYING NOTES.~~


	Three Months Ended June 30,
	2023			2022
Net sales	$	327,145		$	349,384
Operating costs and expenses:
Cost of sales (exclusive of depreciation shown separately below)		240,733			272,400
Selling, general and administrative		55,653			51,745
Depreciation and amortization		8,118			9,806
Restructuring		—			699
Loss on sale of assets and businesses		12,617			—
		317,121			334,650
Operating income		10,024			14,734
Non-service defined benefit income		(820	)		(8,586	)
Debt modification and extinguishment gain		(3,391	)		—
Warrant remeasurement gain, net		(8,001	)		—
Interest expense and other, net		38,649			31,912
Loss from continuing operations before income taxes		(16,413	)		(8,592	)
Income tax expense		1,750			1,750
Net loss	$	(18,163	)	$	(10,342	)
Loss per share—basic:
Net loss	$	(0.27	)	$	(0.16	)
Weighted average common shares outstanding—basic		66,347			64,820
Loss per share—diluted:
Net loss	$	(0.27	)	$	(0.16	)
Weighted average common shares outstanding—diluted		66,347			64,820

See accompanying notes to condensed consolidated financial statements.

~~Triumph Group, Inc.~~

TRIUMPH GROUP, INC.

Condensed Consolidated Statements of Comprehensive ~~Income~~

Loss

(unaudited)

(~~dollars~~Dollars in thousands)

~~SEE ACCOMPANYING NOTES.~~


	Three Months Ended June 30,
	2023			2022
Net loss	$	(18,163	)	$	(10,342	)
Other comprehensive income (loss):
Foreign currency translation adjustment		3,704			(10,382	)
Defined benefit pension plans and other postretirement benefits:
Reclassification to net loss - net of tax expense
Amortization of net loss, net of taxes of $0 and $0, respectively		6,424			(1,251	)
Recognized prior service credits, net of taxes of $0 and $0, respectively		(1,251	)		6,574
Total defined benefit pension plans and other postretirement benefits, net of taxes		5,173			5,323
Cash flow hedges:
Unrealized loss arising during the period, net of tax expense of $0 and $0, respectively		(1,254	)		(470	)
Reclassification of gain (loss) included in net earnings, net of tax expense of $0 and $0, respectively		917			(368	)
Net unrealized loss on cash flow hedges, net of tax		(337	)		(838	)
Total other comprehensive income (loss)		8,540			(5,897	)
Total comprehensive loss	$	(9,623	)	$	(16,239	)

See accompanying notes to condensed consolidated financial statements.

~~Triumph Group, Inc.~~
Stockholders' Deficit

For the three months ended June 30, 2023

(unaudited)

(Dollars in thousands)


	Outstanding Shares			Common Stock All Classes		Capital in Excess of Par Value			Treasury Stock			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total
March 31, 2023		65,432,589		$	65	$	964,741		$	-		$	(554,646	)	$	(1,207,556	)	$	(797,396	)
Net loss		—			—		—			—			—			(18,163	)		(18,163	)
Foreign currency translation adjustment		—			—		—			—			3,704			—			3,704
Pension liability adjustment, net of income taxes of $0		—			—		—			—			5,173			—			5,173
Change in fair value of foreign currency hedges, net of income taxes of $0		—			—		—			—			(337	)		—			(337	)
Share-based compensation		300,102			—		3,622			—			—			—			3,622
Repurchase of restricted shares for minimum tax obligation		(103,996	)		—		—			(1,235	)		—			—			(1,235	)
Retirement of treasury shares		—			—		(414	)		414			—			—			—
Employee stock purchase plan		12,907			—		150			—			—			—			150
Warrant exercises, net of income taxes of $0		1,122,438			1		13,481			—			—			—			13,482
Issuance of shares on pension contribution		3,200,000			4		38,311			821			—			—			39,136
June 30, 2023		69,964,040		$	70	$	1,019,891		$	—		$	(546,106	)	$	(1,225,719	)	$	(751,864	)

TRIUMPH GROUP, INC.

Condensed Consolidated Statements of Stockholders' Deficit

For the three months ended June 30, 2022

(unaudited)

(Dollars in thousands)


	Outstanding Shares	Common Stock All Classes	Capital in Excess of Par Value	Treasury Stock	Accumulated Other Comprehensive Loss	Accumulated Deficit	Total
March 31, 2022	64,614,382	$64	$973,112	$(96)	$(463,354)	$(1,297,149)	$(787,423)
Net loss	—	—	—	—	—	(10,342)	(10,342)
Foreign currency translation adjustment	—	—	—	—	(10,382)	—	(10,382)
Pension liability adjustment, net of income taxes of $0	—	—	—	—	5,323	—	5,323
Change in fair value of foreign currency hedges, net of income taxes of $0	—	—	—	—	(838)	—	(838)
Share-based compensation	471,676	1	1,656	—	—	—	1,657
Repurchase of shares for share-based compensation minimum tax obligation	(172,282)	—	—	(3,442)	—	—	(3,442)
Retirement of treasury shares	—	—	(3,538)	3,538	—	—	—
Employee stock purchase plan	6,605	—	160	—	—	—	160
June 30, 2022	64,920,381	$65	$971,390	$—	$(469,251)	$(1,307,491)	$(805,287)

TRIUMPH GROUP, INC.

Condensed Consolidated Statements of Cash Flows

(~~dollars~~Dollars in thousands) ~~(unaudited)~~

~~SEE ACCOMPANYING NOTES.~~

Notes to Condensed Consolidated Financial Statements

(~~dollars~~Dollars in thousands, except per share data)

1. BACKGROUND AND BASIS OF PRESENTATION ~~AND ORGANIZATION~~

The accompanying unaudited condensed consolidated financial statements of Triumph Group, Inc. ~~(the "Company"~~("Triumph") have been prepared in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, and cash flows. The results of operations for the three ~~and nine~~ months ended ~~December 31, 2017~~June 30, 2023 and 2022, are not necessarily indicative of results that may be expected for the year ending March 31, ~~2018.~~2024. The accompanying condensed consolidated financial statements are unaudited and should be read in conjunction with the fiscal ~~2017~~2023 audited ~~condensed~~ consolidated financial statements and notes thereto included in the Company's Form 10-K for the fiscal year ended March 31, ~~2017~~2023, filed with the Securities and Exchange Commission (the "SEC") on May 24, ~~2017.~~

~~The Company~~2023.

Triumph Group, Inc. ("Triumph" or the "Company") is a Delaware corporation which, through its operating subsidiaries, designs, engineers, manufactures, ~~repairs~~ and ~~overhauls a broad portfolio of aerostructures, aircraft components, accessories, subassemblies and systems. The Company serves a broad, worldwide spectrum of~~sells products for the ~~aviation industry, including~~global aerospace original equipment manufacturers ("OEMs") of ~~commercial, regional, business and military~~ aircraft and aircraft components and repairs and overhauls aircraft components and accessories for commercial airline, air cargo carrier, and military customers on a worldwide basis. Triumph and its subsidiaries (collectively, the "Company") are organized based on the products and services that they provide. The Company has two reportable segments: Systems & Support and Interiors (formerly Aerospace Structures).

Systems & Support consists of the Company’s operations that provide integrated solutions, including design; development; and support of proprietary components, subsystems and systems, as well as production of complex assemblies using external designs. Capabilities include hydraulic, mechanical and electromechanical actuation, power and control; a complete suite of aerospace gearbox solutions, including engine accessory gearboxes and helicopter transmissions; active and passive heat exchange technology; fuel pumps, fuel metering units, and Full Authority Digital Electronic Control fuel systems; and hydromechanical and electromechanical primary and secondary flight controls. Systems & Support also provides full life cycle solutions for commercial, regional, and military aircraft. The Company’s extensive product and service offerings include full post-delivery value chain services that simplify the maintenance, repair, and overhaul (“MRO”) supply chain. Through its ground support equipment maintenance, component MRO, and post-production supply chain activities, Systems & Support is positioned to provide integrated planeside repair solutions globally. Capabilities include repair services for metallic and composite aircraft structures; nacelles; thrust reversers; interiors; auxiliary power units; and a wide variety of pneumatic, hydraulic, fuel, and mechanical accessories. Repair services generally involve the replacement and/or remanufacturing of parts, which is similar to the original manufacture of the part. The processes that the Company performs related to repair and overhaul services are essentially the repair of wear parts or replacement of parts that are beyond economic repair. The repair service generally involves remanufacturing a complete part or a component of a part.

Interiors (formerly Aerospace Structures) consists of the Company’s operations that have historically supplied commercial, business, and regional manufacturers with large metallic structures and continues to supply aircraft interior systems, including air ducting and thermal acoustic insulations systems. Subsequent to the divestitures disclosed in Note 3, the remaining operations of Interiors are those that supply commercial and regional ~~airlines and air cargo carriers.~~

Effective January 1, 2018, the Company combined its Aerospace Structures and Precision Components reporting segments into one reporting segment, Aerospace Structures. Aerospace Structures and Precision Components share many of the same customers and suppliers and have substantial inter-company work on common programs. As a single operating segment, the Company believes it will be able to leverage their combined resources to make it more cost competitive and to enhance performance. manufacturers with aircraft interior systems.

The newly formed operating segment will also be a reportable segment. As a result, effective January 1, 2018, the Company will have three reporting segments for future financial reporting purposes - Integrated Systems, Product Support and Aerospace Structures.

~~Standards Recently Implemented~~

~~In March 2016, the FASB issued ASU 2016-09,~~ ~~Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting~~ ("ASU 2016-09"). ASU 2016-09 identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. The Company adopted ASU 2016-09 effective April 1, 2017. The adoption of ASU 2016-09 did not have a material impact on the Company'saccompanying condensed consolidated financial ~~statements.~~

~~Standards Issued Not Yet Implemented~~

~~In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers~~ (“ASU 2014-09”, “ASC 606”), which requires recognition of revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The FASB has issued several updates to ASU 2014-09 which must be adopted concurrently with ASU 2014-09.

Under ASC 606, revenue is recognized when control of promised goods or services transfers to a customer and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. The major provisions include determining enforceable rights and obligation between parties, defining performance obligations as the units of accounting under contract, accounting for variable consideration, and determining whether performance obligations are satisfied over time or at a point of time. Additionally, ASC 606 requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

ASC 606 will be effective for the Company beginning April 1, 2018. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (the “full retrospective method”), or retrospectively with the cumulative effect of initially applying ASC 606 recognized at the date of initial application (the "modified retrospective method”). The Company is adopting ASC 606 effective April 1, 2018 and the Company expects to do so using the modified retrospective method.

~~Table of Contents~~

~~Triumph Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(dollars in thousands, except per share data)~~

~~(unaudited)~~

During the fiscal year ended March 31, 2016, we established a cross-functional team to assess and prepare for implementation of the new standard. We are analyzing the impact of the new standard on the Company’s revenue contracts, comparing our current accounting policies and practices to the requirements of the new standard, and identifying potential differences that would result from applying the new standard to our contracts, as well as any potential impacts.

While further analysis of ASC 606 and a review of all material contracts is underway, the adoption of ASC 606 will impact the amount and timing of revenue recognition and the accounting treatment of capitalized pre-production costs for certain of our contracts. Under ASC 606, the units-of-delivery method is no longer viable and some performance obligations may be satisfied over time which will change the timing of recognition of revenue and associated production costs for certain contracts.

ASC 606 is applied by analyzing each contract, or a combination of contracts, to determine if revenue is recognized over time or at a point in time. The Company has determined that some of its contracts will have performance obligations that are satisfied over time and some at a point in time based on when control of goods and services transfers to the customer.

For performance obligations that are satisfied over time, the Company will most likely use an input method as the basis for recognizing revenue. Input methods recognize revenue on the basis of an entity’s efforts or inputs toward satisfying a performance obligation (for example, resources consumed, labor hours expended, costs incurred, time lapsed, or machine hours used) relative to the total expected inputs to satisfy the performance obligation. Performance obligations that are not recognized over time will be recognized at a point in time.

ASC 606 requires the Company to record performance obligations for material rights granted to the customer when contracts offer the customer future purchase options at an incremental discount. The Company is evaluating whether performance obligations for material rights exist for certain contracts which may result in deferral of revenues attributable to such rights. When the material rights are identified, the revenue recognized under ASC 606 results in a different revenue recognition pattern when compared to the revenue recognized under legacy GAAP. However, the Company’s operating cash flows from our contracts with customers will not change. The Transition Adjustment willstatements include the ~~establishment~~accounts of ~~contract assets~~Triumph and ~~liabilities for billings that are lower than, or in excess of, revenue that has~~its wholly-owned subsidiaries. Intercompany accounts and transactions have been ~~recognized.~~

~~The adoption of ASC 606 will not change~~eliminated from the ~~Company's accounting method for forward losses. Forward losses relating to unfulfilled contracts and options will continue to be recorded consistent with historical accounting policies.~~

Under ASC 606, production costs are generally expensed as incurred and not deferred. Additionally, ASC 340-40 is to be applied if existing guidance is not applicable. The Company’s accounting for preproduction, tooling, and certain other costs is expected to continue under existing guidance since they generally do not fall within the scope of ASC 340-40. The Company typically does not incur costs for obtaining contracts that would be capitalized under ASC 340-40.

~~In March 2017, the FASB issued ASU No. 2017-07,~~ ~~Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~ ~~(“ASU 2017-07”). ASU 2017-07 amends ASC 715,~~ ~~Compensation — Retirement Benefits~~, to require employers that present a measure of operating income in their statement of income to include only the service cost component of net periodic pension cost and net periodic postretirement benefit cost in operating expenses (together with other employee compensation costs). The other components of net benefit cost, including amortization of prior service cost/credit, and settlement and curtailment effects, are to be included in nonoperating expenses. Employers that do not present a measure of operating income are required to include the service cost component in the same line item as other employee compensation costs. Employers are required to include all other components of net benefit cost in a separate line item(s). The line item(s) in which the components of net benefit cost other than the service cost are included need to be identified as such on the income statement or in the disclosures. ASU 2017-07 also stipulates that only the service cost component of net benefit cost is eligible for capitalization. ASU 2017-07 is effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The Company is currently performing its assessment of the impact of adopting the guidance; however based on its expectations for the fiscal year ending March 31, 2018, the Company believes it will likely have a material impact due to the reclassification of certain components of pension and OPEB income from capitalized costs (Operating Income) to Other Income. The Company will adopt the new standard on April 1, 2018. Upon adoption, the cumulative affect, approximately $130,000 to $150,000 will be recorded as a current period charge to earnings in our fiscal year ended March 31, 2019. Excluding the service costs, the net periodic pension benefit for the fiscal year ending March 31, 2018 is expected to be $67,000.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases (Topic 842)~~ ("ASU 2016-02"). This update requires recognition of lease assets and lease liabilities on the balance sheet of lessees. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim reporting periods within those years. Early adoption is permitted. ASU 2016-02 requires a

~~Table of Contents~~

~~Triumph Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(dollars in thousands, except per share data)~~

~~(unaudited)~~

~~modified retrospective transition approach and provides certain optional transition relief. The Company is currently evaluating the guidance to determine the impact it will have to the Company's~~accompanying condensed consolidated financial statements.

~~2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~

~~Use of Estimates~~

The preparation of ~~the~~ financial statements in conformity with ~~U.S. GAAP~~accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

~~Revenues~~ and Contract Balances

The Company's revenue is principally from contracts with customers to provide design, development, manufacturing, and support services associated with specific customer programs. The Company regularly enters into long-term master supply agreements that establish general terms and conditions and may define specific program requirements. Many agreements include clauses that provide sole supplier status to the Company for the duration of the program’s life. Purchase orders (or authorizations to proceed) are ~~generally recognized in accordance with~~issued pursuant to the ~~contract terms when products are shipped, delivery has occurred or services have been rendered, pricing is fixed and determinable, and collection is reasonably assured. A significant portion~~master supply agreements. Additionally, a majority of the Company’s ~~contracts are within~~agreements with customers include options for future purchases. Such options primarily reduce the ~~scope~~administrative effort of issuing subsequent purchase

Triumph Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, except per share data)

orders and do not represent material rights granted to customers. The Company generally enters into agreements directly with its customers and is the principal in all current contracts.

The identification of a contract with a customer for purposes of accounting and financial reporting requires an evaluation of the ~~Revenue Recognition - Construction-Type~~terms and ~~Production-Type Contracts~~ ~~topic~~conditions of agreements to determine whether presently enforceable rights and obligations exist. Management considers a number of factors when making this evaluation that include, but are not limited to, the nature and substance of the ~~Accounting Standards Codification ("ASC") 605-35~~business exchange, the specific contractual terms and conditions, the promised products and services, the termination provisions in the contract, as well as the nature and execution of the customer’s ordering process and how the Company is authorized to perform work. Generally, presently enforceable rights and obligations are not created until a purchase order is issued by a customer for a specified number of units of product or services. Therefore, the issuance of a purchase order is generally the point at which a contract is identified for accounting and financial reporting purposes.

Management identifies the promises to the customer. Promises are generally explicitly stated in each contract, but management also evaluates whether any promises are implied based on the terms of the agreement, past business practice, or other facts and circumstances. Each promise is evaluated to determine if it is a performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service. The Company considers a number of factors when determining whether a promise is a distinct performance obligation, including whether the customer can benefit from the good or service on its own or together with other resources that are readily available to the customer, whether the Company provides a significant service of integrating goods or services to deliver a combined output to the customer, or whether the goods or services are highly interdependent. The Company’s performance obligations consist of a wide range of engineering design services and manufactured components, as well as spare parts and repairs for OEMs.

The transaction price for a contract reflects the consideration the Company expects to receive for fully satisfying the performance obligations in the contract. Typically, the transaction price consists solely of fixed consideration but may include variable consideration for contractual provisions such as unpriced contract modifications, cost-sharing provisions, and other receipts or payments to customers. The Company identifies and estimates variable consideration, typically at the most likely amount the Company expects to receive from its customers. Variable consideration is only included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized for the contract will not occur, or when the uncertainty associated with the variable consideration is resolved. Consideration paid or payable to a customer is reflected as a reduction in net revenues when the amounts paid are not related to a distinct good or service at the later of when the related revenue is recognized or when the Company pays or promises to pay the consideration to the customer. The Company's contracts with customers generally require payment under normal commercial terms after delivery with payment typically required within 30 to 120 days of delivery.

The Company generally is not subject to collecting sales tax and has made an accounting policy election to exclude from the transaction price any sales and other similar taxes collected from customers. As a result, any such collections are accounted for on a net basis.

The total transaction price is allocated to each of the identified performance obligations using the relative stand-alone selling price. The objective of the allocation is to reflect the consideration that the Company expects to receive in exchange for the products or services associated with each performance obligation. Stand-alone selling price is the price at which the Company would sell a promised good or service separately to a customer. Stand-alone selling prices are established at contract inception, and subsequent changes in transaction price are allocated on the same basis as at contract inception. When stand-alone selling prices for the Company’s products and services are not observable, the Company uses either the “Expected Cost Plus a Margin” or "Adjusted Market Assessment" approaches to estimate stand-alone selling price. Expected costs onare typically derived from the available periodic forecast information.

Revenue is recognized when or as control of promised products or services transfers to a customer and is recognized at the amount allocated to each performance obligation associated with the transferred products or services. Service sales, principally representing repair, maintenance, and engineering activities are recognized over the contractual period or as services are rendered. Sales under long-term contracts with performance obligations satisfied over time are recognized using either an input or output method. The Company recognizes revenue over time as it performs on these contracts because of the ~~percentage-of-completion method~~continuous transfer of ~~accounting. Accounting~~control to the customer as represented by contractual terms that entitle the Company to the reimbursement of costs plus a reasonable profit for work performed to manufacture products for which the ~~revenue and profit~~Company has no alternate use or for work performed on a ~~contract requires estimates of (1) the contract value or total contract~~customer-owned asset.

With control transferring over time, revenue ~~(2) the total costs at completion, which~~ is ~~equal to the sum of the actual incurred costs to date~~recognized based on the ~~contract and the estimated costs to complete the contract’s scope of work, and (3) the measurement~~extent of progress toward ~~completion. Depending on~~completion of the ~~contract, the~~performance obligation. The Company ~~measures progress toward completion using either~~generally uses the cost-to-cost ~~method or the units-of-delivery~~input method of ~~accounting, with~~progress for its contracts because it best depicts the ~~great majority measured under~~transfer of control to the ~~units-of-delivery method of accounting.~~

~~Adjustments to original estimates for a contract’s revenues,~~ estimated costs at completion of the performance obligation. The Company reviews its cost estimates on contracts on a periodic basis, or when circumstances change

Triumph Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, except per share data)

and ~~estimated total profit are often required as work progresses under~~warrant a ~~contract, as experience is gained and as more information is obtained, even though the scope of work required under the contract may not change, or if contract modifications occur. These~~modification to a previous estimate. Cost estimates are ~~also sensitive to the assumed rate of production. Generally, the longer it takes to complete the~~largely based on negotiated or estimated purchase contract ~~quantity, the more relative overhead~~terms, historical performance trends, and other economic projections. Significant factors that ~~contract will absorb. The impact of revisions in~~influence these estimates include inflationary trends, technical and schedule risk, internal and subcontractor performance trends, business volume assumptions, asset utilization, and anticipated labor agreements.

Revenue and cost estimates isare regularly monitored and revised based on changes in circumstances. Impacts from changes in estimates of net sales and cost of sales are recognized on a cumulative catch-up basis, which recognizes in the current period ~~in which~~ the ~~revisions are made. Provisions~~cumulative effect of the changes on current and prior periods based on a performance obligation’s percentage of completion. Forward loss reserves for anticipated losses on long-term contracts are recorded in ~~the period in which they~~full when such losses become evident, ~~(‘‘forward losses’’)~~to the extent required, and ~~are first offset against costs that~~ are included in ~~inventory, with any remaining amount reflected in accrued~~ contract liabilities ~~in accordance with~~on the ~~Revenue Recognition - Construction-Type~~accompanying condensed consolidated balance sheets. The Company believes that the accounting estimates and ~~Production-Type Contracts~~ ~~topic. Revisions in contract estimates, if significant, can~~assumptions made by management are appropriate; however, actual results could differ materially ~~affect results of operations and cash flows, as well as valuation of inventory. Furthermore, certain contracts are combined or segmented for revenue recognition in accordance with the~~ ~~Revenue Recognition - Construction-Type and Production-Type Contracts~~ ~~topic.~~

During the quarter ended September 30, 2016, the Company discovered an immaterial error in its percentage-of-completion accounting for one of its contracts, which understated cost of sales and overstated net income forfrom those estimates.

For the three months ended June 30, ~~2016,~~2023, cumulative catch-up adjustments resulting from changes in ~~the amount of $11,800~~estimated contract values and $8,142, respectively, and overstated retained earnings as of March 31, 2016 in the amount of $12,700. The Company assessed the materiality of this error on previously issued financial statements in accordance with the ASC 250, ~~Presentation of Financial Statements, and Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 99,~~ ~~Materiality. The Company concluded, based on a review of the quantitative and qualitative factors of the materiality of the amount,~~contract costs that the error was not material to any previously issued financial statements and that the correction of the error in the three months ended September 30, 2016 was not material to that period’s financial statements.

~~Table of Contents~~

~~Triumph Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(dollars in thousands, except per share data)~~

~~(unaudited)~~

Accordingly, in order to correct this immaterial error, the Company recorded a charge to "Cost of sales" in the amount of $24,500, which is presented on the accompanying Condensed Consolidated Statements of Incomearose during the ~~nine~~ ~~months ended December 31, 2016.~~

period were immaterial. For the three months ended ~~December 31, 2017,~~June 30, 2022, cumulative catch-up adjustments resulting from changes in estimates ~~inclusive of changes in forward loss estimates,~~ increased revenue and operating income by approximately $11,747 and $10,694, respectively, and decreased net ~~income~~loss and ~~earnings~~loss per share by approximately ~~$5,319, $4,255~~$10,694 and ~~$0.09, net of tax,~~$0.16, respectively.

Revenues for performance obligations that are not recognized over time are recognized at the point in time when control transfers to the customer. For performance obligations that are satisfied at a point in time, the ~~three months ended December 31, 2016 cumulative catch-up adjustments were balanced between positive and negative variances.~~

~~For~~Company evaluates the ~~nine months ended December 31, 2017, cumulative catch-up adjustments from changes~~point in ~~estimates, inclusive of changes in forward loss estimates, increased operating income, net income and earnings per share by approximately~~ ~~$11,979~~, ~~$9,583~~ ~~and~~ ~~$0.19, net of tax, respectively. For the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2016, cumulative catch-up adjustments from changes in estimates~~ ~~decreased~~ ~~operating income, net income and earnings per share by approximately~~ ~~$(6,290)~~, ~~$(4,522)~~ ~~and~~ ~~$(0.09), net of tax, respectively.~~

~~Amounts representing contract change orders or claims are only included in revenue~~time when ~~such change orders or claims have been settled with~~ the customer can direct the use of and obtain the benefits from the products and services. Generally, the shipping terms determine the point in time when control transfers to the extent that units have been delivered. Additionally, some contracts may contain provisions for revenue sharing, price re-determination, requests for equitable adjustments, change orders or cost and/orcustomers. Shipping and handling activities are not considered performance ~~incentives. Such amounts or incentives~~obligations and related costs are included in ~~contract value when~~cost of sales as incurred.

Differences in the ~~amounts can be reliably estimated and their realization is reasonably assured.~~

Although fixed-price contracts, which extend several years into the future, generally permit the Company to keep unexpected profits if costs are less than projected, the Company also bears the risk that increased or unexpected costs may reduce profit or cause the Company to sustain losses on the contract. In a fixed-price contract, the Company must fully absorb cost overruns, notwithstanding the difficulty of estimating all of the costs the Company will incur in performing these contracts and in projecting the ultimate leveltiming of revenue ~~that may otherwise be achieved.~~recognition and contractual billing and payment terms result in the recognition of contract assets and liabilities. Refer to Note 4 for further discussion.

Included in net sales of Integrated Systems, Aerospace Structures and Precision Components, is the non-cash amortization of acquired contract liabilities that were recognized as fair value adjustments through purchase accounting from various acquisitions. For the three months ended December 31, 2017 and 2016, the Company recognized $34,492 and $29,206, respectively, into net sales on the accompanying Condensed Consolidated Statements of Income. For the ~~nine~~ ~~months ended~~ ~~December 31, 2017 and 2016, the Company recognized $91,862 and $89,031, respectively, into net sales on the accompanying Condensed Consolidated Statements of Income.~~

Product Support provides repair and overhaul services, of which a small portion of services are provided under long-term power-by-the-hour contracts. The Company applies the proportional performance method of accounting to recognize revenue under these contracts. Revenue is recognized over the contract period as units are delivered based on the relative value in proportion to the total estimated contract consideration. In estimating the total contract consideration, management evaluates the projected utilization of its customers’ fleet over the term of the contract, in connection with the related estimated repair and overhaul servicing requirements to the fleet based on such utilization. Changes in utilization of the fleet by customers, among other factors, may have an impact on these estimates and require adjustments to estimates of revenue to be realized.

Concentration of Credit Risk

The Company’s trade and other accounts receivable are exposed to credit risk. However, the risk is limited due to the diversity of the customer base and the customer base’s wide geographical area. Trade accounts receivable from The Boeing Company ("Boeing") (representing commercial, military, and space) represented approximately ~~11%~~17% and 5%12% of total trade accounts receivable as of ~~December 31, 2017~~ ~~and~~ ~~March 31, 2017, respectively. Trade accounts receivable from Gulfstream (representing commercial, military and space) represented approximately 14% and 3% of total trade accounts receivable as of December 31, 2017~~June 30, 2023 and March 31, ~~2017,~~2023, respectively. As of March 31, 2023, trade and other receivables from Daher Aerospace Inc. ("Daher") include receivables that largely corresponded with payables associated with transition services and represented approximately 20% as of March 31, 2023. The transition services agreement with Daher contractually expired as of June 30, 2023, and remaining receivables and payables as of that date were not significant. The Company had no other concentrations of credit risk of more than 10%.

~~Table of Contents~~

~~Triumph Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(dollars in thousands, except per share data)~~

~~(unaudited)~~

Sales to Boeing for the ~~nine~~three months ended ~~December 31, 2017,~~June 30, 2023, were ~~$743,271,~~$78,475, or ~~32%~~24% of net sales, of which ~~$151,803, $302,980, $282,068~~$53,308 and ~~$6,420~~$25,167 were from ~~the Integrated~~ Systems ~~Aerospace Structures, Precision Components~~& Support and ~~Product Support,~~Interiors, respectively. Sales to Boeing for the ~~nine~~three months ended ~~December 31, 2016~~June 30, 2022, were $118,303, ~~were $928,020,~~ or ~~36%~~34% of net sales, of which ~~$157,772, $427,960, $317,426~~$39,588 and ~~$24,862~~$78,715 were from ~~the Integrated~~ Systems ~~Aerospace Structures, Precision Components~~& Support and ~~Product Support,~~Interiors, respectively.

Sales to Gulfstream for the nine months ended December 31, 2017, were $304,157, or 13% of net sales, of which $897, $293,749, $9,203 and $308 were from the Integrated Systems, Aerospace Structures, Precision Components and Product Support, respectively. Sales to Gulfstream for the nine months ended December 31, 2016, were $321,671, or 12% of net sales, of which $1,418, $311,207, $8,855 and $191 were from the Integrated Systems, Aerospace Structures, Precision Components and Product Support, respectively.

No other single customer accounted for more than ~~10%~~10% of the Company’s net sales. However, the loss of any significant customer, including Boeing, ~~and Gulfstream,~~ could have a material adverse effect on the Company and its operating subsidiaries.

Warrants

On December 1, 2022, the Company’s board of directors declared a distribution to holders of the Company’s shares of common stock in the form of warrants to purchase shares of common stock (the “Warrants”). Holders of common stock received three Warrants for every ten shares of common stock held as of December 12, 2022 (the "Record Date"). The Company ~~recognizes compensation expense~~issued approximately 19.5 million Warrants on December 19, 2022, to holders of record of common stock as of the close of business on the Record Date.

Each Warrant represented the right to purchase initially one share of common stock, at an exercise price of $12.35 per Warrant, subject to certain anti-dilution adjustments. Payment for ~~share-based awards~~shares of common stock on exercise of Warrants could have been made in (i) cash or (ii) under certain circumstances, certain of the Company's outstanding notes (the "Designated Notes"). If all Warrants had been exercised and settled as of June 30, 2023, the Company would have been required to issue approximately 18.1 million shares (assuming no over-exercise options, as described below, were exercised). The closing price of the Company’s shares of common stock was $12.37 as of June 30, 2023.

Triumph Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, except per share data)

“Designated Notes” means, collectively, any of the issued and outstanding notes of the Company as designated or undesignated by the Company from time to time; provided that any designation by the Company of a particular series of notes as “Designated Notes” shall retain such designation for a minimum of 20 consecutive business days from (and including) the date of publication of notice of the same by press release. The Company also has the right, but not obligation, to remove one or more series of its notes from being “Designated Notes,” but such redesignation shall only be effective 20 consecutive business days from (and including) the date of publication of notice of the same by press release. The Company initially designated the following notes as “Designated Notes”: the 8.875% Senior Secured First Lien Notes due 2024 (the “2024 First Lien Notes”), the 6.250% Senior Secured Notes due 2024 (the “2024 Second Lien Notes”), and the 7.750% Senior Notes due August 15, 2025 (the “2025 Notes”). On February 3, 2023, the Company published a press release announcing the de-designation of the 2024 First Lien Notes and the 2024 Second Lien Notes.

The common stock warrants are accounted for as derivative liabilities in accordance with ASC 815-40 and included within accrued liabilities on the accompanying condensed consolidated balance sheets. The Company measured the Warrants at fair value as of the issuance date using a Monte Carlo pricing model, a Level 3 fair value measurement (as described below), due to the level of market activity. Inherent in the option pricing simulation are assumptions related to expected stock-price volatility, expected life and risk-free interest rate. The Company estimates the volatility of the Warrants based on implied and historical volatility of the Company’s common stock. The risk-free interest rate is based on the ~~fair value~~U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of ~~those awards at~~ the ~~date~~Warrants. The expected life of ~~grant. Stock-based compensation expense for~~the Warrants is based on the Company’s ability to redeem the Warrants, subject to a 20 calendar-day notice period, as well as the automatic acceleration of the Expiration Date following the Price Condition Date. During the three months ended December 31, ~~2017 and 2016, was $2,719 and $2,163, respectively. Stock-based compensation expense for~~2022, due to increased trading volume, the ~~nine~~ ~~months ended~~ ~~December 31, 2017 and 2016, was~~ ~~$6,137~~ ~~and~~ ~~$6,140, respectively.~~Company began remeasuring outstanding Warrants using the Warrants trading price, a Level 1 fair value measurement (as described below). The ~~Company has classified share-based compensation within selling, general and administrative expenses to correspond with~~Warrants are remeasured at each balance sheet date. Warrants remeasurement adjustments are recognized in warrants remeasurement gain, net on the ~~same line item as~~accompanying condensed consolidated statements of operations.

At distribution, the ~~majority~~fair value of the ~~cash compensation paid to employees. Upon~~Warrants was $19,500. As of June 30, 2023, the ~~exercise~~fair value of ~~stock options or vesting~~the Warrants was approximately $1,456 and $8,001 of ~~restricted stock, the Company first transfers treasury stock, then issues new shares.~~

~~Intangible Assets~~

~~The components of intangible assets, net, are as follows:~~

~~Amortization expense for~~warrants remeasurement gain has been recognized in the three months ended June 30, 2023. Approximately 1.0 million Warrants were exercised in the three months ended June 30, 2023, and approximately 1.4 million have been exercised since the date of the Warrants initial distribution on December ~~31, 2017~~19, 2022, through June 30, 2023. Subsequent to June 30, 2023, approximately 6.7 million warrants were exercised for total cash proceeds, net of transaction costs, of approximately $81,500.

On July 6, 2023, the Company redeemed all of the approximately 11.4 million remaining outstanding Warrants for a total redemption price of approximately $11 pursuant to its June 16, 2023, notice of redemption.

~~Table of Contents~~

~~Triumph Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(dollars in thousands, except per share data)~~

~~(unaudited)~~

Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. When determining fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and also considers assumptions that market participants would use when pricing an asset or liability. The fair value hierarchy has three levels of inputs that may be used to measure fair value: Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities; Level 2—Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability; and Level 3—Unobservable inputs

Triumph Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, except per share data)

for the asset or liability. The Company has applied fair value measurements when measuring the Warrants (refer to the above disclosure), when disclosing the fair value of its long-term debt not recorded at fair value (see Note 6), and to its ~~divestitures~~pension and ~~interest rate swap~~postretirement plan assets (see Note ~~3 and Note 5)~~9).

A reserve has been established to provide for the estimated future cost of warranties on our delivered products. The Company periodically reviews the reserves and adjustments are made accordingly. A provision for warranty on products delivered is made on the basis of historical experience and identified warranty issues. Warranties cover such factors as non-conformance to specifications and defects in material and workmanship. The majority of the Company's agreements include a ~~three-year warranty, although certain programs have warranties up to~~ 20 years. The warranty reserves as of December 31, 2017 and March 31, 2017, were $85,516 and $107,088, respectively. The decrease in warranty reserves during the first nine months of the fiscal year ended March 31, 2018, were offset by a corresponding decrease to the related indemnification asset, which is included in other assets on the accompanying Condensed Consolidated Balance Sheets.

Supplemental Cash Flow Information

~~The Company made interest payments of~~ ~~$54,013~~ ~~and~~ ~~$61,251~~ ~~for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2017 and 2016, respectively.~~

~~During the nine months ended December 31, 2017 and 2016,~~June 30, 2022, the Company ~~financed $2,206 and $11,504, respectively,~~paid $1,159 for income taxes, net of ~~property and equipment additions through capital leases.~~

3. DIVESTED OPERATIONS

AND ASSETS HELD FOR SALE

Fiscal 2023 Divestitures

In ~~September 2017,~~January 2022, the ~~Company sold all~~Company’s Board of ~~the shares of Triumph Processing - Embee Division, Inc. ("Embee") for total cash proceeds of $64,986. As~~Directors committed to a result of the sale of Embee, the Company recognized a loss of $17,857 which is presented on the accompanying Condensed Consolidated Statements of Operations as "Loss on divestiture." The operating results of Embee were includedplan to sell its manufacturing operations located in ~~Integrated Systems through the date of disposal.~~

Stuart, Florida. In September 2016, the Company sold all of the shares of Triumph Aerospace Systems-Newport News, Inc. ("Newport News") for total cash proceeds of $9,000. As a result of the sale of Newport News, the Company recognized a loss of $4,774 which is presented on the accompanying Condensed Consolidated Statements of Operations as "Loss on divestiture." The operating results of Newport News were included in Integrated Systems through the date of disposal.

~~In December 2016,~~February 2022, the Company entered into a definitive agreement with the buyer of these manufacturing operations. This transaction closed in July 2022. The Company recognized a gain of approximately $96,800, net of transaction costs in fiscal year of 2023. In the three months ended June 30, 2023, the Company paid $6,800to ~~divest Triumph Air Repair,~~ the ~~Auxiliary Power Unit Overhaul Operations~~buyer of ~~Triumph Aviation Services - Asia, Ltd.~~the Stuart manufacturing operations and ~~Triumph Engines - Tempe ("Engines~~recognized a loss of approximately $4,300 due to the resolution of claims by the buyer related to the accounts payable representation and ~~APU"). As a result,~~warranty under the purchase agreement and the finalization of certain purchase price adjustments related to the transferred working capital of the divested operations. Additionally, in the three months ended June 30, 2023, the Company recognized a loss on sale of ~~$14,263~~approximately $8,300 related to an adjustment that would have reduced the fiscal 2023 gain on sale. Other claims for indemnification with the ~~sale.~~Buyer of the Stuart facility (refer to Note 12) remain outstanding. The operating results of ~~Engines and APU were~~the Stuart, Florida, manufacturing operations are included ~~in Product Support~~within the Interiors reportable segment through the date of ~~disposal.~~ divestiture.

~~Table of Contents~~

Triumph Group, Inc.

Notes to Condensed Consolidated Financial Statements

(~~dollars~~Dollars in thousands, except per share data)

~~(unaudited)~~

The ~~disposal~~following table shows disaggregated net sales by end market (excluding intercompany sales) for the three months ended June 30, 2023 and 2022:


	Three Months Ended June 30,
	2023		2022
Systems & Support
OEM Commercial	$	81,555	$	78,020
OEM Military		65,796		56,936
MRO Commercial		86,939		60,039
MRO Military		47,602		50,946
Non-aviation		8,108		8,179
Revenue from contracts with customers		290,000		254,120
Amortization of acquired contract liabilities		575		523
Total Systems & Support revenue	$	290,575	$	254,643

Interiors
OEM Commercial	$	35,658	$	90,519
OEM Military		—		28
MRO Commercial		704		3,144
Non-aviation		208		1,050
Revenue from contracts with customers		36,570		94,741
Total Interiors revenue		36,570		94,741
Total revenue	$	327,145	$	349,384

~~To measure the amount of impairment related to the divestitures, the Company compared the fair values of~~ assets ~~and~~or liabilities ~~at the evaluation dates to the carrying amounts~~on a contract-by-contract basis at the end of each reporting period. The following table summarizes the ~~month prior to the respective evaluation dates. The sale of Embee, Newport News and Engines and APU~~Company's contract assets and liabilities ~~are categorized as Level 2 within~~balances:


	June 30, 2023			March 31, 2023			Change
Contract assets	$	112,657		$	103,027		$	9,630
Contract liabilities		(48,096	)		(44,945	)		(3,151	)
Net contract asset	$	64,561		$	58,082		$	6,479

Triumph Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, except per share data)

Inventories are stated at the lower of cost (average-cost or specific-identification methods) or market. The components of inventories are as follows:



	June 30, 2023		March 31, 2023
Raw materials	$	53,904	$	44,834
Work-in-process, including manufactured and purchased components		341,915		304,874
Finished goods		11,323		17,000
Rotable assets		22,244		22,537
Total inventories	$	429,386	$	389,245

Under our contract for the Bombardier Global 7000/8000 wing program ("Global 7000"), the Company has the right to design, develop and manufacture wing components for the Global 7000 program. The Global 7000 contract provides for fixed pricing and requires the Company to fund certain up-front development expenses, with certain milestone payments made by Bombardier.

~~Table of Contents~~

Triumph Group, Inc.

Notes to Condensed Consolidated Financial Statements

(~~dollars~~Dollars in thousands, except per share data)

~~(unaudited)~~

The Global 7000 program charge resulted in the impairment of previously capitalized pre-production costs due to the combination of cost recovery uncertainty, higher than anticipated non-recurring costs and increased forecasted costs on recurring production. The increases in costs were driven by several factors, including: changing technical requirements, increased spending on the design and engineering phase of the program, and uncertainty regarding cost reduction and cost recovery initiatives with our customer and suppliers.

~~The Global 7000 program has continued to incur costs since March 2016 in support of the development and transition to production.~~

In May 2017, Triumph Aerostructures and Bombardier entered into a comprehensive settlement agreement that resolved all outstanding commercial disputes between them, including all pending litigation, related to the design, manufacture and supply of wing components for the Global 7000 business aircraft. The settlement resets the commercial relationship between the companies and allows each company to better achieve its business objectives going forward.

Further cost increases or an inability to meet revised recurring cost forecasts on the Global 7000 program may result in additional forward loss reserves in future periods, while improvements in future costs compared to current estimates may result in favorable adjustments if forward loss reserves are no longer required.

The Company is still in the pre-production stages for the Bombardier and Embraer programs, as these aircrafts are not scheduled to enter service until calendar year 2018, or later. Transition of these programs from development to recurring production levels is dependent upon the success of the programs achieving flight testing and certification, as well as the ability of the Bombardier and Embraer programs to generate acceptable levels of aircraft sales. The failure to achieve these milestones and level of sales or significant cost overruns may result in additional forward losses.

~~5. LONG-TERM DEBT~~

~~Long-term debt consists of the following:~~

~~Revolving Credit Facility~~

In July 2017, the Company entered into a Ninth Amendment to the Credit Agreement (the “Ninth Amendment” and the Existing Credit Agreement as amended by the Ninth Amendment, the “Credit Agreement”) with the Administrative Agent and the Lenders party thereto to, among other things, (i) permit the Company to incur High Yield Indebtedness (as defined in the Credit Agreement) in an aggregate principal amount of up to $500,000, subject to the Company’s obligations to apply the net proceeds from this offering to repay the outstanding principal amount of the term loans in full, (ii) limit the mandatory prepayment provisions to eliminate the requirement that net proceeds received from the incurrence of Permitted Indebtedness (as defined in the Credit Agreement), including the High Yield Indebtedness, be applied to reduce the revolving credit

~~Table of Contents~~

~~Triumph Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(dollars in thousands, except per share data)~~

~~(unaudited)~~

commitments once the revolving credit commitments have been reduced to $800,000, (iii) amend certain covenants and other terms and (iv) modify the current interest rate and letter of credit pricing tiers.

Receivables Securitization Program

In connection with the amendment to the Credit Agreement, the Company incurred $633 of financing costs. These costs, along with the $13,226 of unamortized financing costs subsequent to the amendment, are being amortized over the remaining term of the Credit Agreement. In accordance with the reduction in the capacity of the Credit Agreement, the Company wrote-off a proportional amount of unamortized financing fees prior to the amendment.

In May 2017, the Company entered into an Eighth Amendment to the Third Amended and Restated Credit Agreement, among the Company and its lenders to, among other things, (i) eliminate the total leverage ratio financial covenant, (ii) increase the maximum permitted senior secured leverage ratio financial covenant applicable to each fiscal quarter, commencing with the fiscal quarter ended March 31, 2017, and to revise the step-downs applicable to such financial covenant, (iii) reduce the aggregate principal amount of commitments under the revolving line of credit to $850,000 from $1,000,000, (iv) modify the maturity date of the term loans so that all of the term loans will mature on March 31, 2019, and (v) establish a new higher pricing tier for the interest rate, commitment fee and letter of credit fee pricing provisions.

The obligations under the Credit Facility and related documents are secured by liens on substantially all assets of the Company and its domestic subsidiaries pursuant to a Second Amended and Restated Guarantee and Collateral Agreement, dated as of November 19, 2013, among the administrative agent, the Company and the subsidiaries of the Company party thereto.

Pursuant to the Credit Facility, the Company can borrow, repay and re-borrow revolving credit loans, and cause to be issued letters of credit, in an aggregate principal amount not to exceed $800,000 outstanding at any time. The Credit Facility bears interest at either: (i) LIBOR plus between 1.50% and 3.50%; (ii) the prime rate; or (iii) an overnight rate at the option of the Company. The applicable interest rate is based upon the Company’s ratio of total indebtedness to earnings before interest, taxes, depreciation and amortization. In addition, the Company is required to pay a commitment fee of 0.50% on the unused portion of the Credit Facility. The Company’s obligations under the Credit Facility are guaranteed by the Company’s domestic subsidiaries.

At December 31, 2017, there were $50,000 in borrowings and $30,152 in letters of credit outstanding under the Revolving Line of Credit provisions of the Credit Facility, primarily to support insurance policies. At March 31, 2017, there were $29,999 in borrowings and $27,240 in letters of credit outstanding under the Revolving Line of Credit provisions of the Credit Facility, primarily to support insurance policies. The level of unused borrowing capacity under the Revolving Line of Credit provisions of the Credit Facility varies from time to time depending in part upon its compliance with financial and other covenants set forth in the related agreement. The Credit Facility contains certain affirmative and negative covenants, including limitations on specified levels of indebtedness to earnings before interest, taxes, depreciation and amortization, and interest coverage requirements, and includes limitations on, among other things, liens, mergers, consolidations, sales of assets, and incurrence of debt. If an event of default were to occur under the Credit Facility, the lenders would be entitled to declare all amounts borrowed under it immediately due and payable. The occurrence of an event of default under the Credit Facility could also cause the acceleration of obligations under certain other agreements. The Company is currently in compliance with all such covenants. Although the Company does not anticipate any violations of the financial covenants, its ability to comply with these covenants is dependent upon achieving earnings and cash flow projections. As of December 31, 2017, the Company had borrowing capacity under thisCompany's receivables securitization facility ~~of $719,848 after reductions for borrowings, letters of credit outstanding under the facility and consideration of covenant limitations.~~

~~The Credit Facility also provided for a variable rate term loan~~ (the ~~"2013 Term Loan"~~"Securitization Facility"). The Company repaid the outstanding principal amount of the 2013 Term Loan in quarterly installments, on the first business day of each January, April, July and October. The 2013 Term Loan was paid in full with the proceeds from the Senior Notes due 2025 (see below).

The Company previously maintained an interest rate swap agreement to reduce its exposure to interest on the variable rate portion of its long-term debt. In conjunction with the repayment of the 2013 Term Loan, the Company terminated the interest rate swap receiving $280 upon settlement which is included in Interest expense and other on the accompanying Condensed Consolidated Statements of Operations.

~~Table of Contents~~

~~Triumph Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(dollars in thousands, except per share data)~~

~~(unaudited)~~

~~Receivables Securitization Facility~~

In November 2017, the Company amended the Securitization Facility decreasing the purchase limit from $225,000 to $125,000 and extending the term through November 2020. In connection with the Securitization Facility,, the Company sells on a revolving basis certain ~~trade~~eligible accounts receivable to Triumph Receivables, LLC, a wholly-owned special-purpose entity, which in turn sells a percentage ownership interest in the receivables to commercial paper conduits sponsored by financial institutions. The Company is the servicer of the trade accounts receivable under the Securitization Facility. ~~As of December 31, 2017, the maximum amount available under the Securitization Facility was $125,000.~~ Interest rates are based on ~~LIBOR~~the Bloomberg Short Term Bank Yield Index ("BSBY"), plus a ~~program~~2.25% fee on the drawn portion and a ~~commitment fee. The program~~ fee ~~is 0.13%~~ranging from 0.45% to 0.50% on the ~~amount outstanding under~~undrawn portion of the Securitization Facility. ~~Additionally,~~The drawn fee may be reduced to 2.00% depending on the ~~commitment fee is 0.50% on 100.00%~~credit rating of the ~~maximum amount available under the Securitization Facility.~~Company. Collateralized letters of credit incur fees at a rate of 0.125%. The Company secures its trade accounts receivable, which are generally ~~non-interest bearing,~~non-interest-bearing, in transactions that are accounted for as borrowings pursuant to ~~the~~ASC 860, Transfers and Servicing ~~topic~~. The Company has established a letter of credit facility under the Securitization Facility. Under the provisions of the ~~ASC 860.~~

letter of credit facility, the Company may request the Securitization Facility’s administrator to issue one or more letters of credit that will expire no later than 12 months after the date of issuance, extension or renewal, as applicable.

As of June 30, 2023, the maximum amount available under the Securitization Facility was $100,000. The ~~agreement~~actual amount available under the Securitization Facility at any point in time is dependent upon the balance of eligible accounts receivable as well as the amount of letters of credit outstanding.

At June 30, 2023, there were $0 in borrowings and $19,743 in letters of credit outstanding under the Securitization Agreement, primarily to support insurance policies. The Securitization Facility expires in November 2024.

The agreements governing the Securitization Facility ~~contains~~contain restrictions and covenants, including limitations on the making of certain restricted ~~payments,~~payments; creation of certain ~~liens,~~liens; and certain corporate acts such as mergers, consolidations and the sale of all or substantially all of the Company's assets.

Senior Secured First Lien Notes ~~Due 2021~~

due 2028

On ~~February 26, 2013,~~March 14, 2023, the Company issued ~~$375,000~~$1,200,000 principal amount of ~~4.875%~~9.000% Senior Secured First Lien Notes due ~~2021~~March 15, 2028, pursuant to an indenture among the Company, the Guarantor Subsidiaries, and U.S. Bank National Association, as trustee (the ~~"2021 Notes"~~“2028 First Lien Notes”). The ~~2021~~2028 First Lien Notes were sold at ~~100%~~100% of the principal amount and have an effective interest yield of ~~4.875%~~9.000%. Interest ~~on the 2021 Notes accrues at the rate of 4.875% per annum and~~ is payable semiannually in cash in arrears on ~~April 1~~March 15 and ~~October 1~~September 15 of each year, commencing on ~~October 1, 2013.~~September 15, 2023. In the three months ended June 30, 2023, the Company recognized a gain of approximately $3,400 related to an adjustment to its deferred debt issuance costs, a portion of which related to fiscal 2023. The total issuance costs incurred in connection with the issuance of the 2028 First Lien Notes are now approximately $23,000 and are being amortized over the term of the 2028 First Lien Notes.

The 2028 First Lien Notes and the guarantees are first lien secured obligations of the Company and the Guarantor Subsidiaries. The 2028 First Lien Notes:

(i)

rank equally in right of payment to any existing and future senior indebtedness of the Company and Guarantor Subsidiaries, including the 2025 Notes (as defined below);

(ii)

are effectively senior to all existing and future second lien obligations and all existing and future unsecured indebtedness of the Company and the Guarantor Subsidiaries (including the 2025 Notes), but only to the extent of the value of the Collateral (as defined below), and after giving effect to any permitted additional first lien secured obligations and other permitted liens of senior or equal priority);

(iii)

are senior in right of payment to all future subordinated indebtedness of the Company and the Guarantor Subsidiaries;

(iv)

are secured by the Collateral on a pari passu basis with any future permitted additional first lien secured obligations, subject to the Collateral Trust Agreement;

(v)

are effectively subordinated to any existing and future obligations of the Company and the Guarantor Subsidiaries that are secured by assets that do not constitute the Collateral, in each case, to the extent of the value of the assets securing such obligations; and

(vi)

are structurally subordinated to all existing and future indebtedness and other liabilities of the Company’s existing and future subsidiaries that do not guarantee the 2028 First Lien Notes, including the Securitization Facility.

Triumph Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, except per share data)

The 2028 First Lien Notes are guaranteed on a full, senior, joint and several basis by each of the Company’s domestic restricted subsidiaries (the “Guarantor Subsidiaries”) that guarantees the 2025 Notes. In the future, each of the Company’s domestic restricted subsidiaries (other than any domestic restricted subsidiary that is a receivable subsidiary) that (1) is not an immaterial subsidiary, (2) becomes a borrower under any of its material debt facilities or (3) guarantees (a) any of the Company’s indebtedness or (b) any indebtedness of the Company’s domestic restricted subsidiaries, in the case of either (a) or (b), incurred under any of the Company’s material debt facilities, will guarantee the 2028 First Lien Notes. Under certain circumstances, the guarantees may be released without action by, or consent of, the holders of the 2028 First Lien Notes.

The 2028 First Lien Notes and the guarantees are secured, subject to permitted liens, by first-priority liens on substantially all of the Company’s and the Guarantor Subsidiaries’ assets (including certain of the Company’s real estate assets), whether now owned or hereafter acquired, other than certain excluded property, which liens will secure permitted additional first lien obligations on a pari passu basis, subject to the Collateral Trust Agreement (the “Collateral”). Under certain circumstances, the Collateral may be released without action by, or the consent of, the holders of the 2028 First Lien Notes. The 2028 First Lien Notes and the guarantees will not be secured by the assets of Non-Guarantor Subsidiaries (as defined below), which include the unrestricted subsidiaries to whom certain of the Company’s accounts receivables are and may in the future be sold to support borrowing under the Receivables Securitization Facility.

A collateral trust agreement (the “Collateral Trust Agreement”) among the Company, the Guarantor Subsidiaries, the Collateral Trustee and U.S. Bank National Association, in its capacity as the trustee for the 2028 First Lien Notes, sets forth therein the relative rights with respect to the Collateral as among the trustee for the 2028 First Lien Notes and certain subsequent holders of first lien obligations and covering certain other matters relating to the administration of security interests. The Collateral Trust Agreement generally controls substantially all matters related to the Collateral, including with respect to decisions, distribution of proceeds or enforcement. Pursuant to the Collateral Trust Agreement, on the issue date of the 2028 First Lien Notes the Collateral Trustee will control certain matters related to the Collateral that the Collateral Trust Agreement specifies are in its discretion. If the Company incurs certain types of additional first lien obligations, the Controlling First Lien Holders (as defined in the Collateral Trust Agreement) will have the right to control decisions relating to the Collateral that are outside the Collateral Trustee’s discretion under the Collateral Trust Agreement and the 2028 Note holders may no longer be in control of such decisions.

The Company may redeem the 2028 First Lien Notes, in whole or in part, at any time or from time to time on or after March 15, 2025, at specified redemption prices, plus accrued and unpaid interest, if any, to the redemption date. At any time or from time to time prior to March 15, 2025, the Company may redeem the 2028 First Lien Notes, in whole or in part, at a redemption price equal to 100% of their principal amount plus a make whole premium, together with accrued and unpaid interest, if any, to the redemption date. In addition, the Company may redeem up to 40% of the aggregate principal amount of the outstanding 2028 First Lien Notes prior to March 15, 2025, with the net cash proceeds from certain equity offerings at a redemption price equal to 109.000% of their principal amount, together with accrued and unpaid interest, if any, to the redemption date. The Company may redeem, at any time from time to time before March 15, 2025, up to 10% of the aggregate principal amount of the notes per annum, at a redemption price equal to 103% of the aggregate principal amount plus accrued and unpaid interest, if any, to the redemption date.

If the Company experiences specific kinds of changes of control, the Company is required to offer to purchase all of the 2028 First Lien Notes at a purchase price of 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase.

The 2028 First Lien Notes Indenture contains covenants that, among other things, limit the ability of the Company and its restricted subsidiaries to: (i) incur additional indebtedness; (ii) pay dividends or make other distributions; (iii) make other restricted payments and investments; (iv) create liens; (v) incur restrictions on the ability of restricted subsidiaries to pay dividends or make certain other payments; (vi) sell assets, including capital stock of restricted subsidiaries; (vii) enter into sale and leaseback transactions; (viii) merge or consolidate with other entities; and (ix) enter into transactions with affiliates. In addition, the 2028 First Lien Notes Indenture requires, among other things, the Company to provide financial and current reports to holders of the 2028 First Lien Notes or file such reports electronically with the SEC. These covenants are subject to a number of exceptions, limitations and qualifications set forth in the Indenture, as well as suspension periods in certain circumstances.

Senior Notes Due ~~2022~~

2025

On ~~June 3, 2014,~~August 17, 2017, the Company issued ~~$300,000~~$500,000 principal amount of ~~5.250%~~7.750% Senior Notes due ~~2022~~August 15, 2025 (the ~~"2022~~“2025 Notes" and, together with the 2028 First Lien Notes, the “Senior Notes”). The ~~2022~~2025 Notes were sold at ~~100%~~100% of the principal amount and have an effective interest yield of ~~5.250%~~7.750%. Interest ~~on the 2022 Notes accrues at the rate of 5.250% per annum and is payable semiannually in cash in arrears on June 1 and December 1 of each year, commencing on December 1, 2014.~~

~~Senior Notes Due 2025~~

On August 17, 2017, the Company issued $500,000 principal amount of 7.750% Senior Notes due 2025 (the "2025 Notes"). The 2025 Notes were sold at 100% of principal amount and have an effective interest yield of 7.750%. Interest on the 2025 Notes accrues at the rate of 7.750% per annum and is payable semiannually in cash in arrears on February 15 and August 15 of each year, commencing on February 15, 2018. In connection with the issuance of the 2025 Notes, the Company incurred approximately ~~$8,779~~$8,779 of costs, which were deferred and are being amortized on the effective interest method over the term of the 2025 Notes.

Triumph Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, except per share data)

The 2025 Notes are the Company's senior unsecured obligations and rank equally in right of payment with all of its other existing and future senior unsecured indebtedness and senior in right of payment to all of its existing and future subordinated indebtedness. The 2025 Notes are guaranteed on a full, joint and several basis by each of the Guarantor Subsidiaries.

~~The Company may redeem some or all of the 2025 Notes prior to August 15, 2020 by paying a "make-whole" premium.~~

The Company may redeem some or all of the 2025 Notes on or after August 15, 2020, at specified redemption prices. In addition, prior to August 15, 2020, the Company may redeem up to 35% of the 2025 Notes with the net proceeds of certain equity offerings at a redemption price equal to 107.750% of the aggregate principal amount plus accrued and unpaid interest, if any, subject to certain limitations set forth in the indenture governing the 2025 Notes (the "2025 Indenture").

The Company is obligated to offer to repurchase the 2025 Notes at a price of (i) ~~101%~~101% of their principal amount plus accrued and unpaid interest, if any, as a result of certain change-of-control events and (ii) ~~100%~~100% of their principal amount plus accrued and unpaid interest, if any, in the event of certain asset sales. These restrictions and prohibitions are subject to certain qualifications and exceptions.

The indenture governing the 2025 ~~Indenture~~Notes (the "2025 Indenture") contains covenants that, among other things, limit the Company's ability and the ability of any of the guarantor subsidiaries to (i) grant liens on its assets, (ii) make dividend payments, other distributions or other restricted

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~~Triumph Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(dollars in thousands, except per share data)~~

~~(unaudited)~~

payments, (iii) incur restrictions on the ability of the Guarantor Subsidiaries to pay dividends or make other payments, (iv) enter into sale and leaseback transactions, (v) merge, consolidate, transfer or dispose of substantially all of their assets, (vi) incur additional indebtedness, (vii) use the proceeds from sales of assets, including capital stock of restricted subsidiaries, and (viii) enter into certain transactions with affiliates.

~~Receivables Purchase Agreement~~

~~On March 28, 2016,~~

In the ~~Company entered into a Purchase Agreement ("Receivables Purchase Agreement")~~three months ended June 30, 2023, approximately $13,404 in principal amount of 2025 Notes were used to ~~sell certain accounts receivables to a financial institution without recourse. The Company is~~pay the ~~servicer~~exercise price for approximately 0.9 million Warrants, and resulting extinguishment losses from the write-off of the accounts receivable under the Receivables Purchase Agreement. As of December 31, 2017, the maximum amount available under the Receivables Purchase Agreement was $90,000. Interest rates are based on LIBOR plus 0.65% - 0.70%. As of December 31, 2017 and March 31, 2017, the Company sold $0 and $78,006, respectively, worth of eligible accounts receivable.

deferred debt issuance costs were immaterial.

Financial Instruments Not Recorded at Fair Value

The fair value of the long-term debt was calculated based on either interest rates available for debt with terms and maturities similar to the ~~Company’s~~Company's existing debt arrangements or broker quotes on the Company's existing debt (Level 2 inputs).

Interest paid on indebtedness during the three months ended June 30, 2023 and 2022, amounted to $454 and $25,869, ~~unless quoted market prices were available.~~respectively.

~~6. (LOSS)~~

7. EARNINGS PER SHARE

The calculation of basic earnings per share is based on the weighted average number of common shares considered outstanding during the periods. The calculation of diluted earnings per share reflects the effect of all potentially dilutive securities (principally outstanding Warrants and outstanding restricted stock units). As disclosed in Note 2, the Warrants permitted the tendering of Designated Notes in payment of the exercise price. In computing diluted EPS, the Company applies the if-converted method to the Warrants and such Warrants are assumed to be exercised and the Designated Notes are assumed to be tendered unless tendering cash would be more advantageous to the Warrant holder. Interest (net of tax) on any Designated Notes assumed to be tendered is added back as an adjustment to the numerator. The numerator also is adjusted for any nondiscretionary adjustments based on income (net of tax) including, for example, Warrant remeasurement gains and losses recognized in the period. If cash exercise is more advantageous, the Company applies the treasury stock method to the Warrants when calculating diluted EPS. The following is a reconciliation between the ~~weighted-average~~weighted average outstanding shares used in the calculation of basic and diluted earnings per share:


	Three Months Ended June 30,
	(in thousands)
	2023		2022
Weighted average common shares outstanding - basic		66,347		64,820
Net effect of dilutive warrants, stock options and non-vested stock (1)		—		—
Weighted average common shares outstanding - diluted		66,347		64,820

(1) For the three months ended June 30, 2023, approximately 21.8 million shares that could potentially dilute earnings per share as a result of warrants exercises in the future were not included in diluted weighted average common shares outstanding because to do so would be anti-dilutive. For the three months ended June 30, 2023 and 2022, the shares that could potentially dilute earnings per share in the future related to stock options and non-vested share-based

Triumph Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, except per share data)

compensation that were not included in diluted weighted average common shares outstanding because to do so would have been anti-dilutive were immaterial.

The Company follows the Income ~~Taxes~~Taxes topic of ASC 740, which prescribes a recognition threshold and measurement attribute criteria for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, as well as guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

~~On December 22, 2017,~~The Company's policy is to release the ~~U.S. government enacted~~tax effects from accumulated other comprehensive ~~tax legislation referred to as~~income when all of the ~~Tax Cuts and Jobs Act (the “Act”). The Act introduces tax reform~~related assets or liabilities that ~~reduces the current corporate federal income tax rate from 35% to 21%, among other changes. The Act makes broad and complex changes~~gave rise to the ~~U.S. tax code and it will take time to fully evaluate the~~

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~~Triumph Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(dollars in thousands, except per share data)~~

~~(unaudited)~~

Due to the legislative changes aforementioned, companies need to continually reevaluate their indefinite assertion. Additional withholding taxes and/or deferred tax liability associated with basis differences may be required, but due to the legislative uncertainty around the withholding taxes on distributions under the act, no estimate hasaccumulated other comprehensive income have been recorded as of December 31, 2017. This will be analyzed within the proscribed measurement period. The Company continues to review the anticipated impacts around the base erosion anti-abuse tax (“BEAT”) and the global intangible low taxed income (“GILTI”) which are not effective until the year ended March 31, 2019. The Company has not recorded any impact of these provisions as of December 31, 2017, but plans to perform a full analysis within the proscribed measurement period.

derecognized.

The Company has classified uncertain tax positions as noncurrent income tax liabilities unless expected to be paid in one year. Penalties and tax-related interest expense are reported as a component of income tax ~~expense.~~ expense and are not significant.

As of ~~December 31, 2017~~June 30, 2023 and March 31, ~~2017, the total amount of accrued income tax-related interest and penalties was~~ ~~$312~~ ~~and~~ ~~$282, respectively.~~

~~As of~~ ~~December 31, 2017~~ ~~and~~ ~~March 31, 2017~~,2023, the total amount of unrecognized tax benefits was $~~11,403~~12,174 and $~~10,266~~12,085, respectively, most of which~~$11,403~~ ~~and~~ ~~$10,266, respectively,~~ would impact the effective rate, if recognized. The Company does not anticipate that total unrecognized tax benefits will be reduced in the next 12 months.

As of ~~December 31, 2017,~~June 30, 2023, the Company has a valuation allowance against principally all of its net deferred tax assets given insufficient positive evidence to support the realization of the Company’s deferred tax assets. The Company intends to continue maintaining a valuation allowance on its deferred tax assets until there is sufficient positive evidence to support the reversal of all or some portion of ~~these allowances.~~this allowance. A reduction in the valuation allowance could result in a significant decrease in income tax expense in the period that the release is recorded. However, the exact timing and amount of the reduction in its valuation allowance is unknown at this time and will be subject to the earnings level the Company achieves during fiscal ~~2018 as well as the Company's income in~~2024 and future periods.

The effective income tax rate for the three months ended ~~December 31, 2017,~~June 30, 2023, was ~~22.2%~~(10.7)% as compared ~~to 17.3%~~with (20.4)% for the three months ended ~~December 31, 2016.~~June 30, 2022. For the three months ended ~~December 31, 2017,~~June 30, 2023, the effective income tax rate reflected a ~~$22,398~~limitation on the recognition of tax ~~benefit related~~benefits due to the ~~Act, a $4,758 tax benefit related to the return to provision true up adjustment, the impact of the non-deductible portion of the goodwill impairment, and the partial reversal of previously established~~full valuation allowance related to the current year activity. For the three months ended December 31, 2016, the income tax provision reflected the partial reversal of previously established valuation allowance related to the capital loss generated from the divestiture of TAS-Newport News.

~~The effective income tax rate for the~~ ~~nine~~ ~~months ended December 31, 2017, was 22.1% as compared to 28.1% for the~~ ~~nine~~ ~~months ended December 31, 2016. For the~~ ~~nine~~ months ended December 31, 2017, the effective tax rate reflected a $22,398 tax benefit from the Tax Act, a $4,758 tax benefit from the return to provision true up adjustment, the impact of the non-deductible portion of the goodwill impairment, the partial reversal of previously established valuation allowance related to the current year activity, as well as the disallowed capital loss generated from the divestiture of Embee. For the nine months ended December 31, 2016, the income tax provision reflected the disallowed tax benefit of $1,277 related to the capital loss generated from the divestiture of Newport News.

allowance.

With few exceptions, the Company is no longer subject to U.S. federal, state, or local income tax examinations for fiscal years ended before March 31, ~~2011, U.S. federal income tax examinations for fiscal years ended March 31, 2012 and 2013, state or local examinations for fiscal years ended before March 31, 2013,~~2014, or foreign income tax examinations by tax authorities for fiscal years ended before March 31, ~~2011.~~

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~~Triumph Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(dollars in thousands, except per share data)~~

~~(unaudited)~~

2013.

As of ~~December 31, 2017~~,June 30, 2023, the Company is subject to examination in one state jurisdiction. The Company has filed appeals in a prior state examination related to fiscal years ended March 31, 1999 through March 31, 2005. Because of net operating losses acquired as part of the acquisition of Vought, the Company is subject to U.S. federalsettled its only foreign income tax ~~examinations and various state jurisdictions for the years ended December 31, 2001 and after related to previously filed Vought tax returns.~~examination. The Company believes appropriate provisions for all outstanding issues have been made for all jurisdictions and all open years.

~~The following is a summary of the changes in the carrying value of goodwill by reportable segment, from~~ ~~March 31, 2017~~ ~~through~~ ~~December 31, 2017~~:

The Company's most recent annual goodwill impairment test was performed for all reporting units as of February 1, 2017. The Company also performs the goodwill impairment test on an interim basis upon the occurrence of events or substantive changes in circumstances that indicate a reporting unit's carrying value may be less than its fair value. The Company performed an interim assessment of the fair value of its goodwill due to the Company's decision to combine the Aerospace Structures and Precision Components reporting segments into one reporting segment as noted above. In accordance with ASC 350-20-35-3C, there are several potential events and circumstances that could be indicators of goodwill impairment. A change in a company's reporting unit structure is one of these events, and when this does occur, a company must perform a "before and after" test of the reporting units (see Note 1). Additionally, the Company's enhanced visibility into its future cash flows based on its annual planning process was also an indicator. Consistent with the Company's policy described in the Form 10-K for the fiscal year ended March 31, 2017, the Company performed the goodwill impairment test which includes using a combination of both the market and income approaches to estimate the fair value of each reporting unit.

After performing the "before" portion of the test of the reporting units and concluded that the Precision Component's reporting unit had a fair value that was lower then its carrying value by an amount of $(190,227). Accordingly, the Company recorded a non-cash impairment charge during the quarter ended December 31, 2017 of $(190,227), which is presented on the accompanying Consolidated Statements of Operations as "Impairment of intangible assets”. The decline in fair value is the result of declining revenues from production rate reductions on sun-setting programs and the slower than previously projected ramp in our development programs and the timing of associated earnings and cash flows.

The Company then performed the "after" portion of the test of the reporting units and concluded that the new reporting unit of Aerospace Structure's goodwill had a fair value that was lower then its carrying value by an amount that exceeded the remaining goodwill for the reporting unit. Following the applicable accounting guidance, this impairment charge is deemed to have occurred during the Company's fiscal fourth quarter. Therefore, the Company will record a non-cash impairment charge during the quarter ended March 31, 2018 of $345,001, which will be presented on the Consolidated Statements of Operations as "Impairment of intangible assets” for the fiscal year ended March 31, 2018. The decline in fair value is the result of declining revenues from production rate reductions on sun-setting programs and the slower than previously projected ramp in our development programs and the timing of associated earnings and cash flows (See Note 2 for definition of fair value levels).

As of December 31, 2017, Aerospace Structures has goodwill of $863,901, which was fully impaired and the Precision Components' impairment charge noted above represents its accumulated impairment charges.

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~~Triumph Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(dollars in thousands, except per share data)~~

~~(unaudited)~~

9. PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

The Company sponsors several defined benefit pension plans covering some of its employees. ~~Certain employee groups~~Most employees are ineligible to participate in the plans or have ceased to accrue additional benefits under the plans based upon their service to the Company or years of service accrued under the defined benefit pension plans. Benefits under the defined benefit plans are based on years of service and, for most non-represented employees, on average compensation for certain years. It is the Company’s policy to fund at least the minimum amount required for all qualified plans, using actuarial cost methods and assumptions acceptable under U.S. ~~government~~Government regulations (and for non-U.S. plans, acceptable under local regulations), by making payments into a separate trust.

The Company contributed 3,200,000 shares of common stock to this separate trust with an aggregate contribution value of approximately $39,136 on the contribution date. As a result of the contribution, the Company expects the approximately $14,700 required cash contribution to its U.S. defined benefit pension plans for the fiscal year ending March 31, 2024, to be reduced to zero, and the excess contribution value will reduce future required cash contributions.

In addition to the defined benefit pension plans, the Company provides certain healthcare ~~and life insurance~~ benefits for eligible retired employees. Such benefits are unfunded. ~~Employees achieve eligibility to participate in these contributory plans upon retirement from~~No active ~~service if they meet specified age and years of service requirements. Election to participate for some~~ employees ~~must be made at the date of retirement. Qualifying dependents at the date of retirement~~ are ~~also~~ eligible for these benefits. The vast majority of eligible retirees receive a fixed-dollar benefit they can use to purchase healthcare services. A small number of eligible retirees receive traditional retiree medical ~~coverage.~~benefits for which the company pays all premiums. All retirees who are eligible for these traditional benefits are Medicare-eligible. Current plan documents reserve the right to amend or terminate the plans at any time, subject to applicable collective bargaining requirements for represented employees. From time to time, changes have been made to the benefits provided to various groups of plan participants. Premiums charged to most retirees for medical coverage prior to age 65 are based on years of service and are adjusted annually for changes in the cost of the plans as determined by an independent actuary. In addition to this medical inflation cost-sharing feature, the plans also have provisions for deductibles, co-payments, coinsurance percentages, out-of-pocket limits, schedules of reasonable fees, preferred provider networks, coordination of benefits with other plans and a Medicare carve-out.

In accordance with the Compensation – Retirement Benefits topic of ASC 715, the Company has recognized the funded status of the benefit obligation as of the date of the last ~~remeasurement,~~re-measurement, on the accompanying ~~Condensed Consolidated Balance Sheets.~~condensed consolidated balance sheets. The funded status is measured as the difference between the fair value of the plan’s assets and the pension benefit obligation or accumulated postretirement benefit obligation, of the plan. In order to recognize the funded status, the Company determined the fair value of the plan assets. The majority of the plan assets are publicly traded investments, which were valued based on the market price as of the date of ~~remeasurement.~~re-measurement. Investments that are not publicly traded were valued based on the estimated fair

Triumph Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, except per share data)

value of those investments based on ~~our~~the Company's evaluation of data from fund managers and comparable market ~~data.~~

data or using the net asset value as a practical expedient.

Net Periodic Benefit Plan Costs

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~~Triumph Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(dollars in thousands, except per share data)~~

~~(unaudited)~~

~~The following summarizes the key events whose effects on net periodic benefit cost and obligations are included in the tables above:~~

10. STOCKHOLDERS' ~~EQUITY~~

DEFICIT

Accumulated Other Comprehensive Loss

~~Table of Contents~~

~~Triumph Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(dollars in thousands, except per share data)~~

~~(unaudited)~~

(2)

Includes amortization of actuarial losses and recognized prior service ~~(credits)~~ costs, which are included in ~~the~~ net periodic ~~pension cost of which a portion is allocated~~benefit income. Refer to ~~production as inventoried costs.~~

~~Issuance of Restricted Stock Awards and Stock Options~~

~~Included in the employment agreement~~Note 9 for additional disclosure regarding the Company's CEO were restricted stock awards totaling 179,134 shares. The awards generally vest in full after four to seven years. The fair value of the awards is determined by the product of the number of shares granted, the grant date market price of the Company's stock and adjusted for the market conditions necessary to achieve the awards. Certain of these awards contain performance conditions, in addition to service conditions. The fair value of the awards is expensed over a graded vesting period of the requisite service period of four to seven years. In addition the employment agreement included 150,000 stock options with an exercise price of $30.86, a contractual term of 10 years and vesting over a 4-year period.

postretirement benefit plans.

~~Table of Contents~~

Triumph Group, Inc.

Notes to Condensed Consolidated Financial Statements

(~~dollars~~Dollars in thousands, except per share data)

~~(unaudited)~~

The Company ~~has four~~reports financial performance based on the following two reportable segments: ~~Integrated~~ Systems ~~Aerospace Structures, Precision Components~~& Support and ~~Product Support.~~Interiors. The Company’s reportable segments are aligned with how the business is managed, and the Company's views of the markets ~~that the Company~~it serves. The Chief Operating Decision Maker (the "CODM") evaluates performance and allocates resources based upon review of segment information. The CODM utilizes earnings before interest, income taxes, depreciation and amortization, and pension (“Adjusted ~~EBITDA”~~EBITDAP”) as a primary measure of segment profitability to evaluate performance of its segments and allocate resources.

Integrated Systems consists of the Company’s operations that provides integrated solutions including design, development and support of proprietary components, subsystems and systems, as well as production of complex assemblies using external designs. Capabilities include hydraulic, mechanical and electro-mechanical actuation, power and control; a complete suite of aerospace gearbox solutions including engine accessory gearboxes and helicopter transmissions; active and passive heat exchange technology; fuel pumps, fuel metering units and Full Authority Digital Electronic Control fuel systems; hydro-mechanical and electromechanical primary and secondary flight controls; and a broad spectrum of surface treatment options.

Aerospace Structures consists of the Company’s operations that supply commercial, business, regional and military manufacturers with large metallic and composite structures. Products include wings, wing boxes, fuselage panels, horizontal and vertical tails and sub-assemblies such as floor grids. Inclusive of most of the former Vought Aircraft Division, Aerospace Structures also has the capability to engineer detailed structural designs in metal and composites.

Precision Components consists of the Company’s operations that produce close-tolerance parts primarily to customer designs and model-based definition, including a wide range of aluminum, hard metal and composite structure capabilities. Capabilities include complex machining, gear manufacturing, sheet metal fabrication, forming, advanced composite and interior structures, joining processes such as welding, autoclave bonding and conventional mechanical fasteners and a variety of special processes including: super plastic titanium forming, aluminum and titanium chemical milling and surface treatments.

Product Support consists of the Company’s operations that provide full life cycle solutions for commercial, regional and military aircraft. The Company’s extensive product and service offerings include full post-delivery value chain services that simplify the MRO supply chain. Through its line maintenance, component MRO and postproduction supply chain activities, Product Support is positioned to provide integrated planeside repair solutions globally. Capabilities include fuel tank repair, metallic and composite aircraft structures, nacelles, thrust reversers, interiors, auxiliary power units and a wide variety of pneumatic, hydraulic, fuel and mechanical accessories.

Segment Adjusted ~~EBITDA~~EBITDAP is total segment revenue reduced by operating expenses (less depreciation and amortization) identifiable with that segment. Corporate includes general corporate administrative costs and any other costs not identifiable with one of the Company’s ~~segments, including restructuring of $17,089 for the nine months ended December 31, 2017.~~

segments.

The Company does not accumulate net sales information by product or service or groups of similar products and services, and therefore the Company does not disclose net sales by product or service because to do so would be impracticable.

Selected financial information for each reportable segment ~~and the reconciliation of Adjusted EBITDA to operating income~~ is as follows:

Three Months Ended December 31, Nine Months Ended December 31,
2017 2016 2017 2016
Net sales:
Integrated Systems $ 239,198
$ 256,080
$ 711,099
$ 758,803
Aerospace Structures 282,495
304,235
807,754
956,114
Precision Components 219,675
226,294
685,701
740,354
Product Support 68,039
87,292
202,839
257,317
Elimination of inter-segment sales (34,161 ) (29,038 ) (105,302 ) (99,703 )
$ 775,246
$ 844,863
$ 2,302,091
$ 2,612,885


	Three Months Ended June 30, 2023
	Total			Corporate & Eliminations			Systems & Support			Interiors
Net sales to external customers	$	327,145		$	—		$	290,575		$	36,570
Intersegment sales (eliminated in consolidation)		—			(13	)		—			13
Segment profit and reconciliation to consolidated income before income taxes:
Adjusted EBITDAP		50,256			—			52,149			(1,893	)

Reconciliation of segment profit to loss before income taxes
Depreciation and amortization		(8,118	)		(495	)		(6,940	)		(683	)
Interest expense and other, net		(38,649	)
Corporate expenses		(16,450	)
Share-based compensation expense		(3,622	)
Loss on sale of assets and businesses		(12,617	)
Amortization of acquired contract liabilities		575
Non-service defined benefit income		820
Debt modification and extinguishment gain		3,391
Warrant remeasurement gain, net		8,001
Loss before income taxes		(16,413	)

Total capital expenditures	$	6,401		$	1,832		$	4,060		$	509
Total assets	$	1,649,858		$	113,744		$	1,430,325		$	105,789

~~Table of Contents~~

Triumph Group, Inc.

Notes to Condensed Consolidated Financial Statements

(~~dollars~~Dollars in thousands, except per share data)


	Three Months Ended June 30, 2022
	Total			Corporate & Eliminations			Systems & Support			Interiors
Net sales to external customers	$	349,384		$	—		$	254,643		$	94,741
Intersegment sales (eliminated in consolidation		—			(12	)		—			12
Segment profit and reconciliation to consolidated income before income taxes:
Adjusted EBITDAP		56,729			—			40,149			16,580

Reconciliation of segment profit to loss before income taxes
Depreciation and amortization		(9,806	)		(589	)		(7,521	)		(1,696	)
Interest expense and other, net		(31,912	)
Corporate expenses		(13,949	)
Share-based compensation expense		(1,578	)
Amortization of acquired contract liabilities		523
Non-service defined benefit income		8,586
Consideration payable to customer related to divestiture		(17,185	)
Loss before income taxes		(8,592	)

Total capital expenditures	$	3,044		$	109		$	2,879		$	56

~~(unaudited)~~

Three Months Ended December 31, Nine Months Ended December 31,
2017 2016 2017 2016

(Loss) income before income taxes:
Operating income (expense):
Integrated Systems $ 42,667
$ 51,596
$ 132,171
$ 145,379
Aerospace Structures 12,022
23,867
23,253
57,898
Precision Components (186,225 ) 2,942
(191,100 ) 7,223
Product Support 12,399
14,662
32,069
42,986
Corporate (567 ) (37,901 ) (78,840 ) (81,107 )
(119,704 ) 55,166
(82,447 ) 172,379
Interest expense and other 25,836
19,698
72,229
55,721
$ (145,540 ) $ 35,468
$ (154,676 ) $ 116,658

Depreciation and amortization:
Integrated Systems $ 8,318
$ 9,766
$ 27,857
$ 30,228
Aerospace Structures 19,048
17,942
57,484
54,289
Precision Components 9,850
13,999
27,858
42,344
Product Support 1,663
2,294
5,068
7,230
Corporate 441
330
1,051
989
$ 39,320
$ 44,331
$ 119,318
$ 135,080

Impairment charge of intangible assets:
Precision Components $ 190,227
$ —
$ 190,227
$ —

Amortization of acquired contract liabilities, net:
Integrated Systems $ 11,634
$ 7,628
$ 28,235
$ 27,101
Aerospace Structures 21,352
21,105
60,315
60,190
Precision Components 1,506
473
3,312
1,740
$ 34,492
$ 29,206
$ 91,862
$ 89,031

Adjusted EBITDA:
Integrated Systems $ 39,351
$ 53,734
$ 131,793
$ 148,506
Aerospace Structures 9,718
20,704
20,422
51,997
Precision Components 12,346
16,468
23,673
47,827
Product Support 14,062
16,956
37,137
50,216
Corporate (15,225 ) (23,221 ) (71,994 ) (60,994 )
$ 60,252
$ 84,641
$ 141,031
$ 237,552

Capital expenditures:
Integrated Systems $ 1,903
$ 2,763
$ 5,923
$ 8,586
Aerospace Structures 2,384
2,228
9,503
9,820
Precision Components 3,407
2,636
12,563
11,040
Product Support 599
687
1,629
2,020
Corporate 864
843
2,314
1,657
$ 9,157
$ 9,157
$ 31,932
$ 33,123

~~Table of Contents~~

~~Triumph Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(dollars in thousands, except per share data)~~

~~(unaudited)~~

December 31, 2017 March 31, 2017
Total Assets:
Integrated Systems $ 1,220,259
$ 1,281,828
Aerospace Structures 1,573,942
1,548,239
Precision Components 1,056,015
1,262,691
Product Support 285,302
284,231
Corporate 50,414
37,611
$ 4,185,932
$ 4,414,600

During the three months ended ~~December 31, 2017~~June 30, 2023 and ~~2016,~~2022, the Company had ~~international~~foreign sales of ~~$184,182~~$78,914 and ~~$198,052,~~$70,104, respectively.

~~During~~

12.COMMITMENTS AND CONTINGENCIES

Environmental Matters

Certain of the ~~nine~~ ~~months ended December 31, 2017~~Company's business operations and ~~2016,~~facilities are subject to a number of federal, state, local and foreign environmental laws and regulations. Former owners generally indemnify the Company ~~had international sales~~for environmental liabilities related to the assets and businesses acquired which existed prior to the acquisition dates. In the opinion of ~~$529,226 and $561,177, respectively.~~


~~12.~~	~~SELECTED CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PARENT, GUARANTORS AND NON-GUARANTORS~~

~~The 2021 Notes,~~management, there are no significant environmental contingent liabilities which would have a material effect on the 2022 Notes and the 2025 Notes are fully and unconditionally guaranteed on a joint and several basis by the Guarantor Subsidiaries. The total assets, stockholders' equity, revenue, earnings and cash flows fromfinancial condition or operating ~~activities of the Guarantor Subsidiaries exceeded a majority of the consolidated total of such items as of and for the periods reported. The only consolidated subsidiaries~~results of the Company ~~that~~which are not ~~guarantors~~covered by such indemnification.

Commercial Disputes and Litigation

Throughout the course of the 2021 Notes, the 2022 Notes and the 2025 Notes (the “Non-Guarantor Subsidiaries”) are: (a) the receivables securitization special-purpose entity; and (b) the foreign operating subsidiaries. The following tables present condensed consolidating financial statements includingCompany’s programs, disputes with suppliers or customers could arise regarding unique contractual requirements, quality, costs or impacts to production schedules. If the Company ~~(the “Parent”), the Guarantor Subsidiaries,~~is unable to successfully and ~~the Non-Guarantor Subsidiaries. Such~~equitably resolve such claims and assertions, its business, financial ~~statements include summary Condensed Consolidating Balance Sheets as~~condition, results of ~~December 31, 2017~~operations, customer relationships and ~~March 31, 2017, Condensed Consolidating Statements of Comprehensive Income for the~~ ~~three and nine~~ ~~months ended~~ ~~December 31, 2017 and 2016, and Condensed Consolidating Statements of Cash Flows for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2017 and 2016~~.

~~Table of Contents~~

~~Triumph Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(dollars in thousands, except per share data)~~

~~(unaudited)~~

~~SUMMARY CONDENSED CONSOLIDATING BALANCE SHEETS:~~

December 31, 2017
Parent
Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries
Eliminations
Consolidated
Total
Current assets:
Cash and cash equivalents $ 12,628
$ 8,396
$ 43,364
$ —
$ 64,388
Trade and other receivables, net —
69,305
251,694
—
320,999
Inventories —
1,342,611
120,113
—
1,462,724
Prepaid expenses and other 20,027
10,469
13,004
—
43,500
Total current assets 32,655
1,430,781
428,175
—
1,891,611
Property and equipment, net 10,920
618,925
120,077
—
749,922
Goodwill and other intangible assets, net —
1,321,175
134,145
—
1,455,320
Other, net 21,496
45,329
22,254
—
89,079
Intercompany investments and advances 2,354,461
81,541
72,512
(2,508,514 ) —
Total assets $ 2,419,532
$ 3,497,751
$ 777,163
$ (2,508,514 ) $ 4,185,932

Current liabilities:
Current portion of long-term debt $ 574
$ 14,561
$ —
$ —
$ 15,135
Accounts payable 3,324
340,106
43,651
—
387,081
Accrued expenses 49,520
531,133
46,758
—
627,411
Total current liabilities 53,418
885,800
90,409
—
1,029,627
Long-term debt, less current portion 1,317,662
41,814
—
—
1,359,476
Intercompany advances 283,926
2,080,159
488,955
(2,853,040 ) —
Accrued pension and other postretirement benefits, noncurrent 6,608
503,033
—
—
509,641
Deferred income taxes and other 9,404
495,634
33,636
—
538,674
Total stockholders’ equity 748,514
(508,689 ) 164,163
344,526
748,514
Total liabilities and stockholders’ equity $ 2,419,532
$ 3,497,751
$ 777,163
$ (2,508,514 ) $ 4,185,932

~~Table of Contents~~

~~Triumph Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(dollars in thousands, except per share data)~~

~~(unaudited)~~

~~SUMMARY CONDENSED CONSOLIDATING BALANCE SHEETS:~~

March 31, 2017
Parent
Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries
Eliminations
Consolidated
Total
Current assets:
Cash and cash equivalents $ 19,942
$ 24,137
$ 25,554
$ —
$ 69,633
Trade and other receivables, net 546
34,874
276,372
—
311,792
Inventories —
1,243,461
96,714
—
1,340,175
Prepaid expenses and other 7,763
11,678
10,623
—
30,064
Assets held for sale —
3,250
18,005
—
21,255
Total current assets 28,251
1,317,400
427,268
—
1,772,919
Property and equipment, net 8,315
673,153
123,562
—
805,030
Goodwill and other intangible assets, net —
1,560,050
174,919
—
1,734,969
Other, net 17,902
67,955
15,825
—
101,682
Intercompany investments and advances 2,057,534
81,541
77,090
(2,216,165 ) —
Total assets $ 2,112,002
$ 3,700,099
$ 818,664
$ (2,216,165 ) $ 4,414,600

Current liabilities:
Current portion of long-term debt $ 33,298
$ 14,432
$ 112,900
$ —
$ 160,630
Accounts payable 17,291
426,646
37,306
—
481,243
Accrued expenses 53,829
578,457
42,093
—
674,379
Liabilities related to assets held for sale —
—
18,008
—
18,008
Total current liabilities 104,418
1,019,535
210,307
—
1,334,260
Long-term debt, less current portion 974,693
60,977
—
—
1,035,670
Intercompany advances 178,381
1,754,529
370,907
(2,303,817 ) —
Accrued pension and other postretirement benefits, noncurrent 6,633
585,501
—
—
592,134
Deferred income taxes and other 1,403
564,358
40,302
—
606,063
Total stockholders’ equity 846,474
(284,801 ) 197,148
87,652
846,473
Total liabilities and stockholders’ equity $ 2,112,002
$ 3,700,099
$ 818,664
$ (2,216,165 ) $ 4,414,600

~~Table of Contents~~

~~Triumph Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(dollars in thousands, except per share data)~~

~~(unaudited)~~

~~CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME:~~

For the Three Months Ended December 31, 2017
Parent
Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries
Eliminations
Consolidated
Total
Net sales $ —
$ 705,792
$ 88,443
$ (18,989 ) $ 775,246

Operating costs and expenses:
Cost of sales —
563,033
68,162
(18,989 ) 612,206
Selling, general and administrative 27,914
27,331
6,902
—
62,147
Depreciation and amortization 441
34,606
4,273
—
39,320
Impairment of intangible assets —
135,013
55,214
—
190,227
Restructuring 2,382
2,637
1,130
—
6,149
Curtailment and settlement gain, net

(15,099 ) —
—
—
(15,099 )
15,638
762,620
135,681
(18,989 ) 894,950
Operating (loss) income (15,638 ) (56,828 ) (47,238 ) —
(119,704 )
Intercompany interest and charges (39,386 ) 38,877
509
—
—
Interest expense and other 23,686
2,796
(646 ) —
25,836
Income (loss) before income taxes 62
(98,501 ) (47,101 ) —
(145,540 )
Income (benefit) tax expense (49,074 ) 15,715
1,071
—
(32,288 )
Net income (loss) 49,136
(114,216 ) (48,172 ) —
(113,252 )
Other comprehensive (loss) income (613 ) 7,235
(1,824 ) —
4,798
Total comprehensive (loss) income $ 48,523
$ (106,981 ) $ (49,996 ) $ —
$ (108,454 )

~~Table of Contents~~

~~Triumph Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(dollars in thousands, except per share data)~~

~~(unaudited)~~

~~CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME:~~

For the Three Months Ended December 31, 2016
Parent
Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries
Eliminations
Consolidated
Total
Net sales $ —
$ 772,916
$ 90,526
$ (18,579 ) $ 844,863

Operating costs and expenses:
Cost of sales —
599,381
72,397
(18,579 ) 653,199
Selling, general and administrative 16,955
41,991
7,804
—
66,750
Depreciation and amortization 331
39,850
4,150
—
44,331
Restructuring 6,231
4,449
387
—
11,067
Loss on divestiture and assets held for sale 14,350
—
—
—
14,350
37,867
685,671
84,738
(18,579 ) 789,697
Operating (loss) income (37,867 ) 87,245
5,788
—
55,166
Intercompany interest and charges (45,597 ) 43,466
2,131
—
—
Interest expense and other 18,542
3,963
(2,807 ) —
19,698
(Loss) income before income taxes (10,812 ) 39,816
6,464
—
35,468
Income (benefit) tax expense (8,980 ) 13,666
1,450
—
6,136
Net (loss) income (1,832 ) 26,150
5,014
—
29,332
Other comprehensive (loss) income 1,731
(1,573 ) (15,066 ) —
(14,908 )
Total comprehensive (loss) income $ (101 ) $ 24,577
$ (10,052 ) $ —
$ 14,424

~~Table of Contents~~

~~Triumph Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(dollars in thousands, except per share data)~~

~~(unaudited)~~

~~CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME:~~

For the Nine Months Ended December 31, 2017
Parent
Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries
Eliminations
Consolidated
Total
Net sales $ —
$ 2,096,894
$ 266,101
$ (60,904 ) $ 2,302,091

Operating costs and expenses:
Cost of sales —
1,667,935
214,482
(60,904 ) 1,821,513
Selling, general and administrative 69,820
118,006
26,108
—
213,934
Depreciation and amortization 1,050
105,781
12,487
—
119,318
Impairment of intangible assets —
135,013
55,214
—
190,227
Restructuring 17,089
13,883
2,779
—
33,751
Loss on divestiture 20,371
—
—
—
20,371
Curtailment and settlement gain, net (14,576 ) —
—
—
(14,576 )
93,754
2,040,618
311,070
(60,904 ) 2,384,538
Operating (loss) income (93,754 ) 56,276
(44,969 ) —
(82,447 )
Intercompany interest and charges (122,339 ) 116,076
6,263
—
—
Interest expense and other 63,092
8,181
956
—
72,229
(Loss) income before income taxes (34,507 ) (67,981 ) (52,188 ) —
(154,676 )
Income tax (benefit) expense (64,823 ) 31,414
(706 ) —
(34,115 )
Net income (loss) 30,316
(99,395 ) (51,482 ) —
(120,561 )
Other comprehensive (loss) income (3,012 ) 5,064
19,502
—
21,554
Total comprehensive income (loss) $ 27,304
$ (94,331 ) $ (31,980 ) $ —
$ (99,007 )

~~Table of Contents~~

~~Triumph Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(dollars in thousands, except per share data)~~

~~(unaudited)~~

~~CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME:~~

For the Nine Months Ended December, 2016
Parent
Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries
Eliminations
Consolidated
Total
Net sales $ —
$ 2,388,881
$ 281,978
$ (57,974 ) $ 2,612,885

Operating costs and expenses:
Cost of sales —
1,883,122
227,752
(57,974 ) 2,052,900
Selling, general and administrative 45,052
137,609
22,561
—
205,222
Depreciation and amortization 989
121,412
12,679
—
135,080
Restructuring 15,831
11,735
614
—
28,180
Loss on divestiture and assets held for sale 19,124
—
—
—
19,124
80,996
2,153,878
263,606
(57,974 ) 2,440,506
Operating (loss) income (80,996 ) 235,003
18,372
—
172,379
Intercompany interest and charges (144,666 ) 137,909
6,757
—
—
Interest expense and other 53,657
8,729
(6,665 ) —
55,721
Income before income taxes 10,013
88,365
18,280
—
116,658
Income tax (benefit) expense (7,359 ) 35,783
4,362
—
32,786
Net income 17,372
52,582
13,918
—
83,872
Other comprehensive income (loss) 2,094
(4,719 ) (36,684 ) —
(39,309 )
Total comprehensive income (loss) $ 19,466
$ 47,863
$ (22,766 ) $ —
$ 44,563

~~Table of Contents~~

~~Triumph Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(dollars in thousands, except per share data)~~

~~(unaudited)~~

~~CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS:~~

For the Nine Months Ended December 31, 2017
Parent
Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries
Eliminations
Consolidated
Total
Net income (loss) $ 30,316
$ (99,395 ) $ (51,482 ) $ —
$ (120,561 )

Adjustments to reconcile net income to net cash (used in) operating activities provided by (54,460 ) (139,525 ) 73,560
42,707
(77,718 )
Net cash (used in) provided by operating activities (24,144 ) (238,920 ) 22,078
42,707
(198,279 )
Capital expenditures (2,314 ) (25,507 ) (4,111 ) —
(31,932 )
Proceeds from sale of assets —
68,009
403
—
68,412
Net cash (used in) provided by investing activities (2,314 ) 42,502
(3,708 ) —
36,480
Net increase in revolving credit facility 20,000
—
—
—
20,000
Proceeds on issuance of debt 500,000
—
31,500
—
531,500
Retirements and repayments of debt (314,628 ) (19,333 ) (35,300 ) —
(369,261 )
Payments of deferred financing costs (17,729 ) —
—
—
(17,729 )
Dividends paid (5,956 ) —
—
—
(5,956 )
Repurchase of restricted shares for minimum tax obligation (369 ) —
—
—
(369 )
Intercompany financing and advances (162,174 ) 200,010
4,871
(42,707 ) —
Net cash provided by (used in)financing activities 19,144
180,677
1,071
(42,707 ) 158,185
Effect of exchange rate changes on cash —
—
(1,631 ) —
(1,631 )
Net change in cash and cash equivalents (7,314 ) (15,741 ) 17,810
—
(5,245 )
Cash and cash equivalents at beginning of period 19,942
24,137
25,554
—
69,633
Cash and cash equivalents at end of period $ 12,628
$ 8,396
$ 43,364
$ —
$ 64,388

~~Table of Contents~~

~~Triumph Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(dollars in thousands, except per share data)~~

~~(unaudited)~~

~~CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS:~~

For the Nine Months Ended December, 2016
Parent
Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries
Eliminations
Consolidated
Total
Net income $ 17,372
$ 52,582
$ 13,918
$ —
$ 83,872

Adjustments to reconcile net income to net cash provided by (used in) operating activities (2,419 ) (294,036 ) 27,922
12,010
(256,523 )
Net cash provided by (used in) operating activities 14,953
(241,454 ) 41,840
12,010
(172,651 )
Capital expenditures (1,657 ) (22,442 ) (9,024 ) —
(33,123 )
Proceeds from sale of assets —
22,253
932
—
23,185
Acquisitions, net of cash acquired —
9
—
—
9
Net cash used in investing activities (1,657 ) (180 ) (8,092 ) —
(9,929 )
Net increase in revolving credit facility 316,121
—
—
—
316,121
Proceeds on issuance of debt 201
—
12,700
—
12,901
Retirements and repayments of debt (21,368 ) (10,676 ) (63,700 ) —
(95,744 )
Payments of deferred financing costs (14,012 ) —
—
—
(14,012 )
Dividends paid (5,944 ) —
—
—
(5,944 )
Repayment of government grant —
(14,570 ) —
—
(14,570 )
Repurchase of restricted shares for minimum tax obligations (182 ) —
—
—
(182 )
Intercompany financing and advances (288,995 ) 275,159
25,846
(12,010 ) —
Net cash (used in) provided by financing activities (14,179 ) 249,913
(25,154 ) (12,010 ) 198,570
Effect of exchange rate changes on cash —
—
(1,513 ) —
(1,513 )
Net change in cash and cash equivalents (883 ) 8,279
7,081
—
14,477
Cash and cash equivalents at beginning of period 1,544
201
19,239
—
20,984
Cash and cash equivalents at end of period $ 661
$ 8,480
$ 26,320
$ —
$ 35,461

~~Table of Contents~~

~~Triumph Group, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(dollars in thousands, except per share data)~~

~~(unaudited)~~

~~13. COMMITMENTS AND CONTINGENCIES~~

related transactions could be materially adversely affected.

In the ordinary course of business, the Company is involved in disputes, claims and lawsuits with employees, suppliers and customers, as well as governmental and regulatory inquiries, that it deems to be immaterial. Some may involve claims or potential claims of substantial damages, fines, penalties or injunctive relief. While the Company cannot predict the outcome of any pending or future litigation or proceeding and no assurances can be given, the Company does not believe that any pending matter will have a material effect, individually or in the aggregate, on its financial position or results of operations.

~~14. RESTRUCTURING COSTS~~

~~During the fiscal year ended March 31, 2017,~~

Divestitures, Disposals, Guarantees, and Indemnifications

As disclosed in Note 3, we have engaged in a number of divestitures. In connection with divestitures and related transactions, the Company ~~committed~~from time to ~~a restructuring~~time has indemnified and has been indemnified by third parties against certain liabilities that may arise in connection with, among other things, business activities prior to the completion of the respective transactions. The term of these indemnifications, which typically pertain to environmental, tax and product liabilities, is generally indefinite. As of June 30, 2023, no indemnification assets or liabilities have been recorded.

As it relates to certain divestitures, disputes have arisen or may continue to arise between the Company and the acquirer subsequent to the completion and closing of ~~its businesses~~the divestiture transaction. Such disputes have included or may include amounts payable to or from the buyer for closing working capital adjustments to the purchase price as well as claims regarding alleged violations of contractual terms, representations, and warranties of the ~~consolidation~~sale agreements, among other matters. The outcome of certain of its facilities ("2017 Restructuring Plan"). The Company expects to reduce its footprint by approximately 1.0 million square feet, to reduce head count by approximately 100 employees and to amend certain contracts. Over the next few fiscal years,such disputes typically involve negotiations between the Company ~~estimates that it will record aggregate pre-tax charges of $55,000~~and the acquirer, but could also lead to $60,000 related to these programs, which represent employee termination benefits, contract termination costs, accelerated depreciation and facility closure and other exit costs, and will result in future cash outlays.

~~During~~litigation between the fiscal year ended March 31, 2016, the Company committed to a restructuring of certain of its businesses as well as the consolidation of certain of its facilities ("2016 Restructuring Plan"). The Company expects to reduce its footprint by approximately 3.5 million square feet and to reduce head count by approximately 1,200 employees. Over the next few fiscal years, the Company estimates that it will record aggregate pre-tax charges of $140,000 to $150,000 related to these programs, which represent employee termination benefits, contract termination costs, accelerated depreciation and facility closure and other exit costs, and will result in future cash outlays.

~~The following table provides a summary of the Company's current aggregate cost estimates by major type of expense associated with the restructuring plans noted above:~~

Type of expense: Total estimated amount expected to be incurred
Termination benefits $ 21,000
Facility closure and other exit costs (1) 44,000
Contract termination costs 18,000
Accelerated depreciation charges (2) 37,000
Other (3) 89,000
$ 209,000

~~(1)~~ I~~ncludes costs to transfer product lines among facilities and outplacement and employee relocation costs.~~

~~(2) Accelerated depreciation charges are recorded as part of Depreciation and amortization on the Consolidated Statement of Operations.~~

~~(3) Consists of other costs directly related to the plan, including project management, legal, regulatory costs and other transformation related costs, such as costs to amend certain contracts.~~

~~The restructuring charges recognized for the three and nine months ended December 31, 2017 and 2016, by type and by segment consisted of the following:~~

~~Table of Contents~~

Triumph Group, Inc.

Notes to Condensed Consolidated Financial Statements

(~~dollars~~Dollars in thousands, except per share data)

~~(unaudited)~~

For the Three Months Ended December 31, 2017
Integrated Systems Aerospace Structures Precision Components Product Support Corporate Total
Termination benefits $ 26
$ —
$ 1,121
$ —
$ —
$ 1,147
Facility closure and other exit costs —
—
474
—
—
474
Other 929
980
218
19
2,382
4,528
Total Restructuring 955
980
1,813
19
2,382
6,149
Depreciation and amortization 382
—
—
—
—
382
Total $ 1,337
$ 980
$ 1,813
$ 19
$ 2,382
$ 6,531

For the Three Months Ended December 31, 2016
Integrated Systems Aerospace Structures Precision Components Product Support Corporate Total
Termination benefits $ —
$ —
$ 494
$ 57
$ —
$ 551
Facility closure and other exit costs —
297
1,209
180
—
1,686
Other 49
2,296
133
121
6,231
8,830
Total Restructuring 49
2,593
1,836
358
6,231
11,067
Depreciation and amortization 46
—
3,006
13
—
3,065
Total $ 95
$ 2,593
$ 4,842
$ 371
$ 6,231
$ 14,132

For the Nine Months Ended December 31, 2017
Integrated Systems Aerospace Structures Precision Components Product Support Corporate Total
Termination benefits $ 26
$ —
$ 1,868
$ —
$ —
$ 1,894
Facility closure and other exit costs 70
3,504
4,761
—
—
8,335
Other 1,673
980
3,001
779
17,089
23,522
Total Restructuring 1,769
4,484
9,630
779
17,089
33,751
Depreciation and amortization 1,909
—
629
—
—
2,538
Total $ 3,678
$ 4,484
$ 10,259
$ 779
$ 17,089
$ 36,289

For the Nine Months Ended December, 2016
Integrated Systems Aerospace Structures Precision Components Product Support Corporate Total
Termination benefits $ 286
$ 250
$ 966
$ 147
$ —
$ 1,649
Facility closure and other exit costs —
297
1,456
215
—
1,968
Other 49
6,307
2,185
191
15,831
24,563
Total Restructuring 335
6,854
4,607
553
15,831
28,180
Depreciation and amortization 139
—
9,854
303
—
10,296
Total $ 474
$ 6,854
$ 14,461
$ 856
$ 15,831
$ 38,476

~~Termination benefits include employee retention, severance~~

parties, and ~~benefit payments~~the ultimate claims made by the parties against each other could be material. As of June 30, 2023, we have accrued for ~~terminated employees. Facility closure~~our estimate of probable losses associated with such disputes, but losses in excess of those currently accrued could be incurred and may be material. The Company has received notification of claims which allege certain bases for indemnification and damages relating to certain divestitures, including a May 17, 2023, letter relating to the sale of the Stuart facility. The relevant agreements generally contain limits on certain damages that may be payable under the relevant agreements. For example, the divestiture agreement relating to the sale of the Stuart facility contains an $18,750 general cap on breaches of representations (other than certain specified representations) and a $25,000 cap on breaches of certain specified representations related to contracts and product warranties, in each case absent certain circumstances, including fraud or breaches of fundamental or tax representations. As disclosed in Note 3, on June 16, 2023, the Company entered into a settlement agreement with the buyer of the Stuart facility resolving a working capital dispute with the buyer resulting in an amount of $2,400 payable to the Company and resolving claims by the buyer related to the accounts payable representation and warranty under the purchase agreement resulting in an amount of $9,200 payable to the buyer, with such amount applicable to the general cap referred to above. The amounts were settled on a net basis by the Company paying $6,800 to the buyer. Other claims for indemnification with the Buyer of the Stuart facility remain outstanding. While the Company cannot predict the outcome of any pending or future litigation, proceeding, or claim and no assurances can be given, the Company intends to vigorously defend claims brought against it and does not believe that any pending matter will have a material effect, individually or in the aggregate, on its financial position or results of operations. If the Company is unable to successfully and equitably resolve such claims and assertions, its business, financial condition, and results of operations could be materially adversely affected.

Additionally, in connection with certain divestitures, the Company has obtained customer consent to assign specified long-term contracts to the acquirer of the divested business by entering into consent-to-assignment agreements among the customer, the acquirer, and the Company. Pursuant to certain of these agreements, the Company remains a co-obligor under the contract pursuant to guarantee agreements with the customer that predate the divestiture transaction. The term of these obligations typically covers a period of 2 to 5 years from the date of divestiture. There is no limitation to the maximum potential future liabilities under these contracts; however, the Company is typically indemnified by acquirers against such losses that may arise from the acquirers’ failure to perform under the assigned contracts. As of June 30, 2023, no related indemnification assets or liabilities or guarantee liabilities have been recorded, and the Company has not been called upon to act as co-obligor under such arrangements through that date. Also, in connection with certain divestitures, the Company has assigned lease facility lease agreements to the acquirers and entered into agreements to act as a co-obligor under the lease agreement in the event of non-performance under the lease by the assignee. The Company is generally indemnified by the assignee or other third party to the transaction. On May 2, 2023, the Company received a letter from a lessor associated with one such transaction to assert the lessor’s rights against the Company as guarantor. The lease payment associated with the lease is approximately $130 per month over a lease term ending December 31, 2031, although the landlord has acknowledged its duty to mitigate damages by re-leasing the property. The Company expects to be fully indemnified for any amounts payable under such guarantee.

As the Company has completed the disposal of certain facilities, it may be exposed to additional costs ~~include general operating costs incurred subsequent to production shutdown~~such as ~~well as equipment relocation and other associated costs. Contract~~environmental remediation obligations, lease termination costs, ~~include~~or customer or supplier claims which may have a material effect on its financial position or results of operations when such matters arise and a reasonable estimate of the costs ~~associated with terminating existing leases~~can be made. For example, in the year ended March 31, 2023, the Company withdrew from the IAM National Pension Fund (the “Fund), which is a multiemployer pension plan to which the Company previously contributed on behalf of certain of its represented employees. Such withdrawal occurred as part of the Company’s exit of its Spokane, Washington, composites manufacturing operations. In April 2023, the Company received a letter from the Fund confirming the Company’s complete withdrawal from the Fund and ~~supplier agreements. Other transformation costs include legal, outplacement~~indicating that the Company’s portion of the unfunded vested benefits (the “Withdrawal Liability”) was estimated to be approximately $14,644, payable in quarterly installments of approximately $400 over a period of approximately thirteen years. The Withdrawal Liability is subject to further adjustment based on the finalization of the Fund’s actuarial valuation for the plan year ending December 31, 2021, (i.e., the applicable plan year preceding the date of the Company’s withdrawal). As of June 30, 2023, the Company's liability for this obligation is included on the accompanying condensed consolidated balance sheets is approximately $14,235, representing its estimate of the remaining obligation based on the letter received from the Fund. The Company is in the process of reviewing and ~~employee relocation costs,~~responding to the withdrawal liability assessment, and ~~other employee-related costs and costs to amend certain contracts.~~it is possible the Withdrawal Liability could be reduced during that process.

~~Table Of Contents~~

Management's Discussion and Analysis of

Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of ~~Operations.~~

(Operations

The following discussion should be read in conjunction with the ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements and notes thereto contained elsewhere herein.)

OVERVIEW

Business

We are a major supplier to the aerospace industry and have ~~four operating~~two reportable segments: (i) ~~Integrated~~ Systems & Support, whose companies’ revenues are derived from integrated solutions, including design, development and support of proprietary components, subsystems and systems, ~~as well as~~ production of complex assemblies using external designs; (ii) Aerospace Structures, whose companies supply commercial, business, regional and military manufacturers with large metallic and composite structures; (iii) Precision Components, whose companies produce close-tolerance parts primarily to customer designs, ~~and model-based definition, including a wide range of aluminum, hard metal and composite structure capabilities; and (iv) Product Support, whose companies provide~~as well as full life cycle solutions for commercial, regional, and military ~~aircraft.~~

~~Effective January 1, 2018,~~aircraft; and (ii) Interiors, whose companies' revenues are primarily derived from supplying commercial and regional manufacturers with thermo-acoustic insulation, composite components, ducting and primarily to customer designs and model-based definition.

Divestitures

As disclosed in Note 3, in July 2022, we ~~combined~~completed the sale of our ~~Aerospace Structures~~manufacturing operations located in Stuart, Florida, and ~~Precision Components reporting segments into one reporting segment, Aerospace Structures. Aerospace Structures~~recognized a gain in the second quarter of fiscal 2023. The Stuart operations specialized in the assembly of large, complex metallic structures such as wing and Precision Components share many of the same customers and suppliers and have substantial inter-company work on common programs. As a single operating segment, we believe we will be able to leverage their combined resources to make it more cost competitive and enhance performance. The newly formed operating segment will also be a reportable segment. As a result, effective January 1, 2018, we will have three reporting segments for future financial reporting purposes - Integrated Systems, Product Support and Aerospace Structures.

~~In September 2017, the Company sold all of the shares of Triumph Processing - Embee Division, Inc. ("Embee") for total cash proceeds of $64,986.~~fuselage assemblies. As a result of the completion of this sale, we have exited our structures business and reshaped our portfolio of ~~Embee, the Company recognized a loss~~companies to consist primarily of ~~$17,857, which is included in Corporate.~~ businesses providing systems and aftermarket services. The operating results ~~of Embee were~~associated with the Stuart operations are included ~~in Integrated Systems~~within Interiors through the date of ~~disposal.~~

~~Highlights~~divestiture.

Summary of Significant Financial Results

Significant financial results for the ~~third~~first quarter of the fiscal year ending March 31, ~~2018 included:~~

2024, include:

•

Net sales ~~for the third quarter of the fiscal year ending March 31, 2018~~ were ~~$775.2~~$327.1 million compared ~~to $844.9~~with $349.4 million for the prior year period.

•

Operating ~~loss in the third quarter of fiscal 2018~~income was ~~$(119.7) million and included a non-cash impairment charge of $190.2~~$10.0 million compared ~~to $55.2~~with $14.7 million for the ~~third quarter of fiscal 2017.~~prior year period.

•

Net loss was $18.2 million, or ($0.27) per diluted common share, compared with a net loss of $10.3 million, or ($0.16) per diluted common share, for the ~~third quarter of fiscal 2018 was $113.3 million, compared to net income of $29.3 million for the third quarter of fiscal 2017.~~prior year period.

•

Backlog as of ~~December 31, 2017~~June 30, 2023, was ~~$4.36 billion. Of our existing backlog~~ of ~~$4.36~~$1.74 billion, of which we estimate that approximately ~~$1.72~~$1.10 billion will ~~not~~ be shipped by ~~December 31, 2018.~~June 30, 2024.

~~Net loss for the third quarter of fiscal 2018 was $2.29 per diluted common share, as compared to net income of $0.59 per diluted share in the prior year period.~~

•

We used ~~$198.3~~$63.7 million of cash ~~flow from~~in operating activities for the ~~nine~~three months ended ~~December 31, 2017,~~June 30, 2023, as compared towith cash used in operations of ~~$172.7~~$93.0 million in the comparable prior year period.

Aviation Manufacturing Jobs Protection Program

In November 2021, we entered into an agreement with the Department of Transportation (“DOT”) under the Aviation Manufacturing Jobs Protection Program (“AMJP”). We ~~committed to several plans~~received total proceeds under this program of $19.4 million, of which approximately $8.8 million was received in the three months ended June 30, 2022. In July 2022, we received a letter from the DOT confirming that ~~incorporate~~we had satisfied the ~~restructuring of certain of our businesses as well as~~reporting requirements under the ~~consolidation of certain of our facilities. We expect to reduce our footprint by~~AMJP. In the three months ended June 30, 2022, we recognized approximately ~~4.5~~$5.0 million ~~square feet and to reduce head count by 1,300 employees. Over the course~~ of the ~~plans (which~~grant benefit as a reduction in cost of sales.

Warrants Distribution

As disclosed in Note 2, on December 19, 2022, we issued approximately 19.5 million Warrants to holders of record of common stock as of the Record Date. Each Warrant represented the right to purchase initially one share of common stock at an exercise price of $12.35 per Warrant. Payment for shares of common stock on exercise of Warrants could have been made in (i) cash or (ii) under certain circumstances, Designated Notes (as defined in Note 2). Approximately 1.4 million warrants have been exercised since the date of the Warrants initial distribution on December 19, 2022, through June 30, 2023. Subsequent to June 30, 2023, approximately 6.7 million warrants were ~~initiated~~exercised for total cash proceeds, net of transaction costs, of approximately $81.5 million. On July 6, 2023, the Company redeemed all of the approximately 11.4 million outstanding Warrants for a total redemption price of less than $0.1 million.

Significant Developments in ~~fiscal 2016), we estimate that we will record aggregate pre-tax charges~~Key Programs

Discussion of ~~$195.0 million to $210.0 million related to these plans, which represent employee termination benefits, contract termination costs, accelerated depreciation~~significant developments on key programs is included below.

Boeing 737

The Boeing 737 program represented approximately 12% and ~~facility closure and other exit costs, and will result in future cash outlays. For~~11% of revenue for the ~~nine~~three months ended ~~December 31, 2017~~June 30, 2023 and ~~2016, we recorded charges~~2022, respectively, inclusive of ~~$33.8 million~~both OEM production and ~~$28.2 million, respectively, related to these plans.~~

~~Our 2016~~aftermarket sales. Of the total revenue recognized on the 737 program, OEM revenue represented approximately 73% and ~~2017 restructuring plans~~69% for the three months ended June 30, 2023 and related activities were anticipated to generate annualized savings of approximately $300 million per year on a consolidated basis by fiscal year 2019 from facility consolidations, headcount reductions, operational efficiencies, and supply chain optimization. These anticipated savings were expected to come from our reportable segments approximately as follows: Integrated Systems - 23%; Aerospace Structures - 46%; Precision Components -

2022,

~~Table Of Contents~~

Management's Discussion and Analysis of

Financial Condition and Results of Operations

(continued)

~~26%~~

respectively. In July 2023, Boeing publicly disclosed that the 737 program is transitioning production to 38 per month and ~~Product Support - 5%. A significant portion of~~plans to reach 50 per month in the anticipated savings are expected to be reinvested in business development, research & development and capital improvements to help drive organic growth. Through December 31, 2017, the Company is on target for its consolidated anticipated savings goals, however the nature of those savings has shifted over time to be more weighted towards our supply chain optimization and operational efficiencies than previously anticipated, offset by reduced expectations associated with the facility consolidations and headcount reductions.

Our most recent annual goodwill impairment test was performed for all reporting units as of February 1, 2017. We also perform the goodwill impairment test on an interim basis upon the occurrence of events or substantive changes in circumstances that indicate a reporting unit's carrying value may be less than its fair value. We performed an interim assessment of the fair value2025/2026 timeframe.

Boeing 767

Approximately 14% of our goodwill due to our decision to combine the Aerospace Structures and Precision Components reporting segments into one reporting segment as noted above. In accordance with ASC 350-20-35-3C, there are several potential events and circumstances that could be indicators of goodwill impairment. A changerevenue in a company's reporting unit structure is one of these events, and when this does occur, a company must perform a 'before and after" test of the reporting units. Additionally, the Company's enhanced visibility into its future cash flows based on its annual planning process was also an indicator. Consistent with our policy described in the Form 10-K for the fiscal year ended March 31, 2017, we performed the goodwill impairment test, which includes using a combination of both the market and income approaches to estimate the fair value of each reporting unit.

After performing the "before" portion of the test of the reporting units and concluded that the Precision Component's goodwill had a fair value that was lower then its carrying value by an amount of $190.2 million. Accordingly, we recorded a non-cash impairment charge during the quarter ended December 31, 2017 of $190.2 million, which is presented on the accompanying Consolidated Statements of Operations as "Impairment of intangible assets”. The decline in fair value is the result of declining revenues from production rate reductions on sun-setting programs and the slower than previously projected ramp in our development programs and the timing of associated earnings and cash flows

The Company then performed the "after" portion of the test of the reporting units and concluded that the new reporting unit of Aerospace Structure's goodwill had a fair value that was lower then its carrying value by an amount that exceeded the remaining goodwill for the reporting unit. Following the applicable accounting guidance, this impairment charge is deemed to have occurred during the Company's fiscal fourth quarter. Therefore, we will record a non-cash impairment charge during the quarter ended March 31, 2018 of $345.0 million, which will be presented on the Consolidated Statements of Operations as "Impairment of intangible assets” for the fiscal year ended March 31, 2018. The decline in fair value is the result of declining revenues from production rate reductions on sun-setting programs and the slower than previously projected ramp in our development programs and the timing of associated earnings and cash flows (See Note 2 for definition of fair value levels).

On December 22, 2017, the U.S. government enacted comprehensive tax legislation referred to as the Tax Cuts and Jobs Act (the “Act”). The Act introduces tax reform that reduces the current corporate federal income tax rate from 35% to 21%, among other changes. The Act makes broad and complex changes to the U.S. tax code and it will take time to fully evaluate the impact of these changes on the Company. The Company has recorded a provisional tax benefit of $24.6 million related to the impact of the Act’s reduction in the statutory tax rate on its net deferred tax liability, as well as a provisional tax liability of $2.2 million imposed on unremitted foreign earnings under the Act’s mandatory repatriation provisions. The Company has prepared a reasonable estimate around the impact of the Act and has recorded the provisional impact (SAB 118) as discrete adjustments noted above to the tax provision for the three months ended ~~December 31, 2017. While the Company believes these are reasonable estimates~~June 30, 2022, was generated by 767 production from our Stuart, Florida, operations, which, as disclosed above, was sold as of ~~the~~July 1, 2022. The impact of the Act, additional time is needed to finalize these estimates. While the Company has computed and recorded these provisional amounts, these will be finalized within the established measurement period (not to exceed one year) as additional data and information is gathered. The Company determined that the amounts recorded are provisional as adjustments may occur due to additional guidance from the IRS, the earnings and profit at March 31, 2018, and as certain tax positions are finalized when the Company files its 2018 tax returns.

Due to the legislative changes aforementioned, companies need to continually reevaluate their indefinite assertion. Additional withholding taxes and/or deferred tax liability associated with basis differences may be required, but due to the legislative uncertainty around the withholding taxes on distributions under the act, no estimate has been recorded as of December 31, 2017. This will be analyzed within the proscribed measurement period. The Company continues to review the anticipated impacts around the base erosion anti-abuse tax (“BEAT”) and the global intangible low taxed income (“GILTI”) which are not effective until the year ended March 31, 2019. The Company has not recorded any impact of these provisions as of December 31, 2017, but plans to perform a full analysis within the proscribed measurement period.

~~Table Of Contents~~

~~Management's Discussion and Analysis of~~

~~Financial Condition and Results of Operations~~

~~(continued)~~

We are currently performing work on several new programs, which are in various stages of development. Several of the these programs are expected to enter flight testing during calendar 2018, including the Bombardier Global 7000/8000 ("Bombardier"), and Embraer second generation E-Jet ("E2-Jets") and we expect to deliver revenue generating767 production units for these programs in calendar 2018. Historically, low-rate production commences during flight testing, followed by an increase to full-rate production, assuming that successful testing and certification are achieved. Accordingly, we anticipate that each of these programs will begin generating full-rate production level revenues between calendar 2019 and fiscal 2021. We are still in the early development stages for the Gulfstream G500/G600 programs, as these aircraft are not expected to enter service until fiscal 2019. Transition of each of these programs from development to recurring production levels is dependent upon the success of each program at achieving flight testing and certification, as well as the ability of the OEM to generate acceptable levels of aircraft sales.

During the nine months ended December 31, 2017, we incurred approximately $86.5 million in capitalized pre-production costs associated with the Bombardier Global 7000/8000 and the Embraer second generation E-Jet programs, for which we have not yet begun deliveries. We expect to incur additional costs related to these programs as they continue to develop. Inventory costs are evaluated for recoverability through their inclusion in the total costs used in the calculation of each contract's estimated profit margin. When the estimated total contract costs exceed total estimated contract revenues, a forward loss is established. We may incur additional costs related to these programs if there are further delays due to our customer or our capability to execute timely.

While work progressed on these development programs, we have experienced difficulties in achieving estimated cost targets, particularly in the areas of engineering and estimated recurring costs resulting in previously recorded forward loss provisions. In the fourth quarter of fiscal 2016, we recorded a $399.8 million forward loss on our Global 7000/8000 wing contract. The Global 7000/8000 contract provides for fixed pricing and requires us to fund certain up-front development expenses, with certain milestone payments made by Bombardier.

The provision for forward losses on the Global 7000/8000 program resulted in the impairment of previously capitalized pre-production costs due to the combination of cost recovery uncertainty, higher than anticipated non-recurring costs and increased forecasted costs on recurring production. The increases in costs were driven by several factors, including: changing technical requirements, increased spending on the design and engineering phase of the program and uncertainty regarding cost reduction and cost recovery initiatives with our customer and suppliers.

~~The program has continued to incur costs since March 2016 in support of development and transition to production.~~

On December 22, 2016, Triumph Aerostructures, LLC, the wholly owned subsidiary of the Company that is party to the Global 7000/8000 contract with Bombardier (“Triumph Aerostructures”), initiated litigation against Bombardier in the Quebec Superior Court, District of Montreal. The lawsuit related to Bombardier’s failure to pay to Triumph Aerostructures certain non-recurring expenses incurred by Triumph Aerostructures during the development phase of a program pursuant to which Triumph Aerostructures agreed to design, manufacture, and supply the wing and related components for Bombardier’s Global 7000 business aircraft.

In May 2017, Triumph Aerostructures and Bombardier entered into a comprehensive settlement agreement that resolved all outstanding commercial disputes between them, including all pending litigation, related to the design, manufacture and supply of wing components for Bombardier’s Global 7000/8000 business aircraft. The settlement resets the commercial relationship between the companies and allows each company to better achieve its business objectives going forward.

Under our contract with Embraer, we have the exclusive right to design, develop and manufacture the center fuselage section III, rear fuselage section and various tail section components (rudder and elevator) for the E2-Jets. The contract provides for funding on a fixed amount of non-recurring costs, which will be paid over a specified number of production units. Higher than expected spending on the E2-Jets program has resulted in a near breakeven estimated profit margin percentage, with additional potential future cost pressures as well as opportunities for improved performance. Risks related to additional engineering as well as the recurring cost profile remains as this program completes flight testing.

Further cost increases or an inability to meet revised recurring cost forecasts on the Global 7000/8000 and Embraer programs may result in additional forward loss reserves in future periods, while improvements in future costs compared to current estimates or additional cost recovery may result in favorable adjustments if forward loss reserves are no longer required.

~~Table Of Contents~~

~~Management's Discussion and Analysis of~~

~~Financial Condition and Results of Operations~~

~~(continued)~~

We seek additional consideration for customer work statement changes throughout our contract life as a standard course of business. We recently reached a preliminary agreement with Gulfstream across many programs we support, including butoperating income was not limited to, the G650 wing program. We are also currently engaged with other customers in similar negotiations. The ability to recover or negotiate additional consideration is not certain and varies by contract. Varying market conditions for these products may also impact future profitability.

significant.

Although none of ~~these new~~the programs noted above individually isare expected to have a material impact on our net revenues, they do have the potential, either individually or in the aggregate, to materially and negatively impact our consolidated results of operations if future changes in estimates result in the need for a forward loss provision. Absent any such loss provisions, we do not anticipate that any of these ~~new~~ programs will significantly dilute our future consolidated margins.

In March 2017, the Company settled several outstanding change orders and open pricing on a number of its programs with Boeing. The agreement included pricing settlements, advanced payments, delivery schedule adjustments and the opportunity to extend the mutual relationship on future programs. The agreement also provides for continued build ahead on the 747-8 program through the end of the existing contract, resulting in a reduction to the previously recognized forward losses on the 747-8 program.

As disclosed during fiscal 2016, Boeing announced a rate reduction to the 747-8 program, which lowers production to one plane every two months. We assessed the impact of the rate reduction and recorded an additional $161.4 million forward loss during the fiscal year ended March 31, 2016. Additional costs associated with exiting the facilities where the 747-8 program is manufactured, such as asset impairment, supplier and lease termination charges, as well as severance and retention payments to employees and contractors have been included in the 2016 Restructuring Plan.

~~As previously disclosed, we recognized a provision for forward losses associated with our long-term contract on the 747-8 and Bombardier programs. T~~here is still risk similar to what we have experienced on the 747-8 and Bombardier programs. Particularly, our ability to manage risks related to supplier performance, execution of cost reduction strategies, hiring and retaining skilled production and management personnel, quality and manufacturing execution, program schedule delays, potential need to negotiate facility lease extensions or alternatively relocate work and many other risks, will determine the ultimate performance of these long-term programs.

Recognition of additional forward losses in the future periods continues to be a risk and will depend upon several factors, including the impact of the above discussed production rate change, our ability to successfully perform under current design and manufacturing plans, achievement of forecasted cost reductions as we continue production and our ability to successfully resolve claims and assertions with our customers and suppliers.

In December 2016, the Company entered into a definitive agreement to divest Triumph Air Repair, the Auxiliary Power Unit Overhaul Operations of Triumph Aviation Services - Asia, Ltd. and Triumph Engines - Tempe ("Engines and APU"). As a result, the Company recognized a loss of $14,263 on the sale. The operating results of Engines and APU were included in Product Support through the date of disposal. The transaction closed during the quarter ended June 30, 2017.

In September 2016, the Company sold all of the shares of Triumph Aerospace Systems-Newport News, Inc. ("Newport News) for total cash proceeds of $9,000. As a result of the sale of Newport News, the Company recognized a loss of $4,774, which is included in Corporate. The operating results of Newport News were included in Integrated Systems through the date of disposal.

~~The divestitures of Engines and APU and Newport News are subsequently referred to as the "fiscal 2017 divestitures."~~

RESULTS OF OPERATIONS

The following includes a discussion of our consolidated and business segment results of operations. ~~The Company's~~Our diverse structure and customer base do not ~~allow~~provide for precise comparisons of the impact of price and volume changes to our results. However, we have disclosed the significant variances between the respective periods.

Non-GAAP Financial Measures

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") ~~guidance on Compliance and Disclosure Interpretations,~~rules, we

~~Table Of Contents~~

~~Management's Discussion and Analysis of~~

~~Financial Condition and Results of Operations~~

~~(continued)~~

also disclose and discuss certain non-GAAP financial measures in our public filings and earning releases. Currently, the non-GAAP financial ~~measure~~measures that we disclose isare Adjusted EBITDA, which is our net income ~~from continuing operations~~(loss) before interest and gains or losses on debt modification and extinguishment, income taxes, amortization of acquired contract liabilities, costs incurred pertaining to shareholder cooperation agreements, 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, legal settlements~~incentives; and ~~depreciation and amortization.~~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 towith our previously reported results of operations.

We view Adjusted EBITDA and Adjusted EBITDAP as an operating performance ~~measure~~measures and, as such, we believe that the U.S. GAAP financial measure most directly comparable to itsuch measures is net ~~income.~~income (loss). In calculating Adjusted EBITDA and Adjusted EBITDAP, we exclude from net income ~~from continuing operations~~(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 isand Adjusted EBITDAP are not ~~a measurement~~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), ~~income from continuing operations,~~ 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) ~~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 (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.~~

EBITDA and Adjusted EBITDAP.

Adjusted EBITDA isand 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 ~~from continuing operations~~(loss) has included significant charges for depreciation and amortization.

Management's Discussion and Analysis of

Financial Condition and Results of Operations

(continued)

Adjusted EBITDA ~~excludes~~and Adjusted EBITDAP exclude these charges and ~~provides~~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 ~~is a measure~~and Adjusted EBITDAP are measures of our ongoing operating performance because the isolation of ~~non-cash~~noncash charges, such as depreciation and amortization, and ~~non-operating~~nonoperating items, such as interest, ~~and~~ 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 a financial ~~measure~~measures 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~~these non-GAAP financial ~~measure~~measures as compared towith net income from continuing operations:

~~Divestitures~~•

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.~~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.

•

Shareholder cooperation expenses may be useful for investors to consider because they represent certain costs that may be incurred periodically when reaching cooperative agreements with shareholders. 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.

~~Curtailments,~~•

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, withdrawals, and early retirement ~~incentives~~or other incentives) may be useful for investors to consider because they represent the ~~current period impact~~cost of postretirement benefits to plan participants, net of the ~~change in~~assumption of returns on the ~~defined benefit obligation due to~~plan's assets and are not indicative of the ~~reduction in future service costs as well as the incremental cost of retirement incentive benefits~~cash paid ~~to participants.~~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 ~~non-cash~~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.

~~Table Of Contents~~

~~Management's Discussion and Analysis of~~

~~Financial Condition and Results of Operations~~

~~(continued)~~

•

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 ~~licenses.~~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.

Management's Discussion and Analysis of

Financial Condition and Results of Operations

(continued)

•

The amount of interest expense and other, as well as debt modification and 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.

Management compensates for the above-described limitations of using non-GAAP measures by using a non-GAAP measure only to supplement our ~~U.S.~~ 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~~loss for the indicated periods (in thousands):

Three Months Ended December 31, Nine Months Ended December 31,
2017 2016 2017 2016
Net (loss) income $ (113,252 ) $ 29,332
$ (120,561 ) $ 83,872
Loss on divestitures —
14,350
20,371
19,124
Pension settlement charge (15,099 ) —
(14,576 ) —
Amortization of acquired contract liabilities, net (34,492 ) (29,206 ) (91,862 ) (89,031 )
Depreciation and amortization * 229,547
44,331
309,545
135,080
Interest expense and other 25,836
19,698
72,229
55,721
Income tax expense (32,288 ) 6,136
(34,115 ) 32,786
Adjusted EBITDA $ 60,252
$ 84,641
$ 141,031
$ 237,552
* - Includes Impairment charges related to intangible assets


	Three Months Ended June 30,
	2023			2022
Net loss (U.S. GAAP measure)	$	(18,163	)	$	(10,342	)
Income tax expense		1,750			1,750
Interest expense and other		38,649			31,912
Debt modification and extinguishment gain		(3,391	)		—
Warrant remeasurement gain, net		(8,001	)		—
Consideration payable to customer related to divestiture		—			17,185
Shareholder cooperation expenses		1,905			—
Loss on sale of assets and businesses, net		12,617			—
Share-based compensation		3,622			1,578
Amortization of acquired contract liabilities		(575	)		(523	)
Depreciation and amortization		8,118			9,806
Adjusted EBITDA (non-GAAP measure)	$	36,531		$	51,366
Non-service defined benefit income (excluding pension related charges)		(820	)		(8,586	)
Adjusted EBITDAP (non-GAAP measure)	$	35,711		$	42,780

The following tables show our Adjusted ~~EBITDA~~EBITDAP by reportable segment reconciled to our operating income (loss) for the indicated periods (in thousands):

Three Months Ended December 31, 2017
Total Integrated Systems Aerospace Structures Precision Components Product Support
Corporate/
Eliminations
Operating income (loss) $ (119,704 ) $ 42,667
$ 12,022
$ (186,225 ) $ 12,399
$ (567 )
Loss on divestitures —
—
—
—
—
—
Curtailment & settlement gain, net (15,099 ) —
—
—
—
(15,099 )
Amortization of acquired contract liabilities, net (34,492 ) (11,634 ) (21,352 ) (1,506 ) —
—
Depreciation and amortization * 229,547
8,318
19,048
200,077
1,663
441
Adjusted EBITDA $ 60,252
$ 39,351
$ 9,718
$ 12,346
$ 14,062
$ (15,225 )

* - Includes Impairment charges related to intangible assets


	Three Months Ended June 30, 2023
	Total			Systems & Support			Interiors			Corporate/ Eliminations
Operating income (loss)	$	10,024		$	45,784		$	(2,576	)	$	(33,184	)
Loss on sale of assets and businesses		12,617			—			—			12,617
Shareholder cooperation expenses		1,905			—			—			1,905
Share-based compensation		3,622			—			—			3,622
Amortization of acquired contract liabilities		(575	)		(575	)		—			—
Depreciation and amortization		8,118			6,940			683			495
Adjusted EBITDAP	$	35,711		$	52,149		$	(1,893	)	$	(14,545	)


	Three Months Ended June 30, 2022
	Total			Systems & Support			Interiors			Corporate/ Eliminations
Operating income (loss)	$	14,734		$	33,151		$	(2,301	)	$	(16,116	)
Consideration payable to customer related to divestiture		17,185			—			17,185			—
Share-based compensation		1,578			—			—			1,578
Amortization of acquired contract liabilities		(523	)		(523	)		—			—
Depreciation and amortization		9,806			7,521			1,696			589
Adjusted EBITDAP	$	42,780		$	40,149		$	16,580		$	(13,949	)

~~Table Of Contents~~

Management's Discussion and Analysis of

Financial Condition and Results of Operations

(continued)

Three Months Ended December 31, 2016
Total Integrated Systems Aerospace Structures Precision Components Product Support
Corporate/
Eliminations
Operating income (loss) $ 55,166
$ 51,596
$ 23,867
$ 2,942
$ 14,662
$ (37,901 )
Loss on divestitures 14,350
—
—
—
—
14,350
Amortization of acquired contract liabilities, net (29,206 ) (7,628 ) (21,105 ) (473 ) —
—
Depreciation and amortization 44,331
9,766
17,942
13,999
2,294
330
Adjusted EBITDA $ 84,641
$ 53,734
$ 20,704
$ 16,468
$ 16,956
$ (23,221 )

Nine Months Ended December 31, 2017
Total Integrated Systems Aerospace Structures Precision Components Product Support
Corporate/
Eliminations
Operating income (loss) $ (82,447 ) $ 132,171
$ 23,253
$ (191,100 ) $ 32,069
$ (78,840 )
Loss on divestitures 20,371
—
—
—
—
20,371
Curtailment & settlement gain, net (14,576 ) —
—
—
—
(14,576 )
Amortization of acquired contract liabilities, net (91,862 ) (28,235 ) (60,315 ) (3,312 ) —
—
Depreciation and amortization * 309,545
27,857
57,484
218,085
5,068
1,051
Adjusted EBITDA 141,031
$ 131,793
$ 20,422
$ 23,673
$ 37,137
$ (71,994 )

* - Includes Impairment charges related to intangible assets

Nine Months Ended December 31, 2016
Total Integrated Systems Aerospace Structures Precision Components Product Support
Corporate/
Eliminations
Operating income (loss) $ 172,379
145,379
$ 57,898
$ 7,223
$ 42,986
$ (81,107 )
Loss on divestitures 19,124
—
—
—
—
19,124
Amortization of acquired contract liabilities, net (89,031 ) (27,101 ) (60,190 ) (1,740 ) —
—
Depreciation and amortization 135,080
30,228
54,289
42,344
7,230
989
Adjusted EBITDA $ 237,552
$ 148,506
$ 51,997
$ 47,827
$ 50,216
$ (60,994 )

The fluctuations from period to period within the amounts of the components of the reconciliations above are discussed further below within Results of Operations.

Three months ended ~~December 31, 2017~~June 30, 2023, compared towith three months ended ~~December 31, 2016~~

Three Months Ended December 31,
2017 2016
(dollars in thousands)
Net sales $ 775,246
$ 844,863
Segment operating income $ (119,137 ) $ 93,067
Corporate expense (567 ) (37,901 )
Total operating income (119,704 ) 55,166
Interest expense and other 25,836
19,698
Income tax expense (32,288 ) 6,136
Net (loss) income $ (113,252 ) $ 29,332

June 30, 2022


	Three Months Ended June 30,
(In thousands)	2023		2022
Commercial OEM	$	117,213	$	168,539
Military OEM		65,796		56,964
Total OEM Revenue		183,009		225,503

Commercial Aftermarket		87,643		63,183
Military Aftermarket		47,602		50,946
Total Aftermarket Revenue		135,245		114,129

Non-Aviation Revenue		8,316		9,229
Amortization of acquired contract liabilities		575		523
Total Net Sales	$	327,145	$	349,384

Commercial OEM sales decreased $51.3 million, or 30.5% due to divestitures and exited or sunsetting programs, which represented approximately $60.0 million in net changes. Excluding impacts from divestitures and exited or sunsetting programs, organic Commercial OEM sales increased $8.7 million, or 8.1%, on increased production volumes on Boeing 787 and 737 programs, offset by reductions across other commercial rotorcraft programs.

Military OEM sales increased $8.8 million, or 15.5%, all of which were organic, primarily due to increased sales related to the CH-53K, V-22, and UH-60 programs.

Aftermarket sales include both repair and overhaul services as well as the sales of spare parts. Commercial Aftermarket sales increased $24.5 million, or 38.7%. Excluding impacts from divestitures, organic Commercial Aftermarket sales increased $25.9 million, or 42.5%, driven by the continued improvement in overall air travel metrics, favorably impacting both repair and overhaul services and spare part sales on an equal basis.

Military aftermarket sales decreased $3.3 million, or 6.6%, all of which was organic, driven by reduced sales across several fixed wing platforms and reduced spares on rotorcraft platforms relative to the prior year, partially offset by increased repairs on rotorcraft platforms.


	Three Months Ended June 30,
	2023			2022
Segment operating income	$	43,208		$	30,850
Corporate expense		(33,184	)		(16,116	)
Total operating income		10,024			14,734
Non-service defined benefit plan income		(820	)		(8,586	)
Interest expense & other		38,649			31,912
Debt modification and extinguishment gain		(3,391	)		-
Warrant remeasurement gain		(8,001	)		-
Income tax expense		1,750			1,750
Net loss	$	(18,163	)	$	(10,342	)

~~Table Of Contents~~

Management's Discussion and Analysis of

Financial Condition and Results of Operations

(continued)

~~Net~~

Segment Operating Income

Segment operating income increased $12.4 million, or 40.1%. Excluding impacts from divestitures and exited or sunsetting programs, organic segment operating income increased $17.4 million, or 60.3%, driven by the increased volume disclosed above along with reduced general and administrative human capital costs $0.7 million, lower depreciation and amortization $1.1 million, and reduced professional services costs $0.5 million.

Cost of OEM Sales decreased primarily due to divestitures and exited or sunsetting programs, which represented approximately $54.6 million in net changes. Organic gross profit margin percentage on OEM sales decreased ~~by $69.6 million, or 8.2%,~~ to ~~$775.2 million~~13.0% for the three months ended ~~December 31, 2017,~~June 30, 2023 from ~~$844.9 million~~14.1% for the three months ended ~~December 31, 2016. Organic~~June 30, 2022 due to inflationary increases in labor and material costs and the prior period AMJP grant benefit of approximately $5.0 million.

Cost of Aftermarket sales adjusted for inter-segment sales decreased $34.1 million, or 4.2%. The fiscal 2017 and Embee divestitures contributed $35.5 million in net sales to the comparative prior year period. Organic sales decreasedincreased primarily due to the ~~completion of and continued rate reductions~~increased Commercial Aftermarket sales noted above. Organic gross profit margin on ~~certain Boeing and Airbus programs. Net~~Aftermarket sales increased to 41.0% for the three months ended ~~December 31, 2017, included $2.8 million in total non-recurring revenues, as compared to $5.6 million in non-recurring revenues~~June 30, 2023 from 35.9% for the three months ended ~~December 31, 2016.~~

~~Cost of sales decreased $41.0 million, or 6.3%,~~June 30, 2022. This increase was driven by increased volumes and related efficiencies, as well as increases in prices for repair and overhaul services.

Consolidated gross profit margin improved to ~~$612.2 million~~26.4% for the three months ended ~~December 31, 2017,~~June 30, 2023, from ~~$653.2 million~~22.0% for the three months ended ~~December 31, 2016. Organic cost~~June 30, 2022. This improvement was driven by the increased mix in Aftermarket sales as a percentage of ~~sales decreased $15.4 million,~~total sales.

Excluding impacts from divestitures and exited or 2.2%. The fiscal 2017 and Embee divestitures contributed $25.6 million to cost of sales in the comparative prior year period. Organic cost of sales decreased due to the decrease in organic sales mentioned above and changes in sales mix. The comparablesunsetting programs, organic gross margin for the three months ended ~~December 31, 2017~~June 30, 2023, was ~~21.0%, as~~26.9% compared ~~to 22.4%,~~with 25.5% for the three months ended ~~December 31, 2016.~~

~~Gross margin included net favorable cumulative catch-up adjustments on long-term contracts of $5.3 million.~~June 30, 2022. The ~~cumulative catch-up adjustments to~~ gross ~~margin included gross favorable adjustments of $26.4 million and gross unfavorable adjustments of $21.1 million. Gross~~ margin for the three months ended ~~December 31, 2016 included net favorable cumulative catch-up adjustments~~June 30, 2023 increased primarily as a result of ~~$2.1 million.~~

~~Segment operating income decreased by $212.2 million, or 228.0%, to an operating loss~~the increased mix in Aftermarket sales as a percentage of ~~$(119.1) million~~total sales. Gross profit for the three months ended ~~December 31, 2017,~~June 30, 2022, included $5.0 million benefit from ~~operating income of $93.1 million for~~ the ~~three months ended December 31, 2016. Organic segment operating income decreased $16.6~~AMJP grant.

Corporate Expense

Corporate expense increased $17.1 million, or 18.9%. The fiscal 2017 and Embee divestitures contributed $5.4 million to operating income for the three months ended December 31, 2016. Organic operating income for the three months ended December 31, 2017 decreased105.9%, primarily due to ~~the decline~~$12.6 million in ~~organic sales noted above~~losses on sale of assets and ~~the previously mentioned goodwill impairment charge of $190.2~~business and $3.7 million in professional services costs, including $1.9 million in professional and ~~included costs~~legal fees related to ~~our restructuring plans of $3.8 million.~~

~~Corporate expenses were $0.6 million for the three months ended December 31, 2017, as compared to $37.9 million for the three months ended December 31, 2016. The decrease~~negotiations resulting in ~~corporate expenses of $37.3 million, or 98.5%, was impacted by the OPEB settlement gain of $15.1 million, decreased consulting costs of $6.0 million~~a shareholder cooperation agreement.

Interest Expense and ~~restructuring charges of $3.8 million. The prior year period included the loss on divestiture of the Engines and APU business of $14.4 million.~~

Other

Interest expense and other increased ~~by $6.1 million, or 31.2%, to $25.8 million for the three months ended December 31, 2017, compared to $19.7 million for the three months ended December 31, 2016,~~ due to higher interest on increased interest rates ~~partially offset~~compared to the prior year period.

Non-service Defined Benefit Income

Non-service defined benefit income decreased by ~~lower relative debt levels.~~

$7.8 million primarily due to changes in discount rates and experience.

Income Taxes

The effective ~~income~~ tax rate for the three months ended ~~December 31, 2017~~June 30, 2023 was ~~22.1%~~(10.7)%, compared ~~to 17.3%~~with (20.4)% for the three months ended ~~December 31, 2016. For the three months ended December 31, 2017, the~~June 30, 2022. The effective tax rate reflected a ~~$22.4 million~~limitation on the recognition of tax ~~benefit related~~benefits due to the Act, a $4.8 million tax benefit related to the return to provision true up adjustment, the impact of the non-deductible portion of the goodwill impairment, and the partial reversal of previously establishedfull valuation ~~allowance related to the current year activity. For the~~allowance.

Business Segment Performance — Three months ended June 30, 2023, compared with three months ended December 31, 2016, the income tax provision reflected the partial reversal of previously established valuation allowance related to the capital loss generated from the divestiture of TAS-Newport News.

For the fiscal year ending March 31, 2018, the Company expects its effective tax rate to be approximately 1.0% with opportunity to be reduced further through the release of the valuation allowance that is discussed further in Note 7.

~~Table Of Contents~~

~~Management's Discussion and Analysis of~~

~~Financial Condition and Results of Operations~~

~~(continued)~~

~~Business Segment Performance - Three months ended December 31, 2017 compared to three months ended December 31, 2016~~

June 30, 2022

We report our financial performance based on the following ~~four~~two reportable segments: ~~Integrated~~ Systems ~~Aerospace Structures, Precision Components~~& Support and ~~Product Support.~~ Interiors. Our Chief Operating Decision Maker ("CODM") utilizes Adjusted EBITDAP as a primary measure of profitability to evaluate performance of its segments and allocate resources.

The results of operations among our ~~operating~~reportable segments vary due to differences in competitors, customers, extent of proprietary deliverables and performance. For example, ~~Integrated~~ Systems & Support, which generally includes proprietary products and/or arrangements ~~in which~~where we become the primary source or one of a few primary sources to our customers, ~~whereby~~ our unique engineering and manufacturing capabilities command a higher margin. ~~Also, OEMs are increasingly focusing on assembly activities while outsourcing more manufacturing~~

Refer to Note 1 for further details regarding the operations and ~~repair to third parties, and as a result, are less~~capabilities of ~~a competitive force than in previous years. This compares to Aerospace Structures, which generally includes long-term sole-source or preferred supplier contracts and the success~~each of ~~these programs provides a strong foundation for~~ our business and positions us well for future growth on new programs and new derivatives. In contrast, Product Support provides MRO services on components and accessories manufactured by third parties, with more diverse competition, including airlines, OEMs and other third-party service providers. In addition, variability in the timing and extent of customer requests performed in Product Support can provide for greater volatility and less predictability in revenue and earnings than that experienced in Integrated Systems, Aerospace Structures and Precision Componentsreportable segments.

Product Support consists of the Company’s operations that provides full life cycle solutions for commercial, regional and military aircraft. The Company’s extensive product and service offerings include full post-delivery value chain services that simplify the MRO supply chain. Through its line maintenance, component MRO and postproduction supply chain activities, Product Support is positioned to provide integrated planeside repair solutions globally. Capabilities include fuel tank repair, metallic and composite aircraft structures, nacelles, thrust reversers, interiors, auxiliary power units and a wide variety of pneumatic, hydraulic, fuel and mechanical accessories.

We currently generate a majority of our revenue from ~~clients~~sales to OEMs and aftermarket MRO services in the commercial ~~aerospace industry, the~~airline and military ~~the business jet industry~~ and ~~the regional airline industry.~~defense markets. Our growth and financial results are largely dependent on continued demand for our products and services ~~from clients in~~within these ~~industries.~~markets. If any of ~~these~~the related industries experiences a downturn, our clients in these sectors may conduct less business with us. ~~The following table summarizes our net sales by end market by business segment.~~ The loss of one or more of our major customers or an economic downturn in the commercial airline or the military and defense markets could have a material adverse effect on our business.

~~Table Of Contents~~

Management's Discussion and Analysis of

Financial Condition and Results of Operations

(continued)

Three Months Ended December 31,
2017 2016
Integrated Systems
Commercial aerospace 16.4 % 14.8 %
Military 10.7 % 11.7 %
Business Jets 2.0 % 2.2 %
Regional 1.1 % 0.9 %
Non-aviation 0.5 % 0.6 %
Total Integrated Systems net sales 30.7 % 30.2 %
Aerospace Structures
Commercial aerospace 15.7 % 15.2 %
Military 4.0 % 5.8 %
Business Jets 15.7 % 14.1 %
Total Aerospace Structures net sales 35.7 % 35.2 %
Precision Components
Commercial aerospace 16.4 % 16.7 %
Military 5.4 % 4.6 %
Business Jets 2.0 % 2.1 %
Regional 0.5 % 0.4 %
Non-aviation 0.8 % 0.4 %
Total Precision Components net sales 25.1 % 24.2 %
Product Support
Commercial aerospace 7.0 % 7.9 %
Military 0.9 % 1.8 %
Regional 0.6 % 0.7 %
Total Product Support net sales 8.5 % 10.4 %
Total Consolidated net sales 100.0 % 100.0 %

~~We continue~~


	Three Months Ended June 30,						% Change			% of Total Sales
	2023			2022						2023			2022
	(in thousands)
NET SALES
Systems & Support	$	290,575		$	254,643			14.1	%		88.8	%		72.9	%
Interiors		36,583			94,753			(61.4	)%		11.2	%		27.1	%
Elimination of inter-segment sales		(13	)		(12	)		(8.3	)%		—			—
Total net sales	$	327,145		$	349,384			(6.4	)%		100.0	%		100.0	%


	Three Months Ended June 30,						% Change			% of Segment Sales
	2023			2022						2023			2022
	(in thousands)
SEGMENT OPERATING INCOME (LOSS)
Systems & Support	$	45,784		$	33,151			38.1	%		15.7	%		13.0	%
Interiors		(2,576	)		(2,301	)		(12.0	)%		(7.0	)%		(2.4	)%
Corporate		(33,184	)		(16,116	)		(105.9	)%	n/a			n/a
Total segment operating income	$	10,024		$	14,734			(32.0	)%		3.1	%		4.2	%


	Three Months Ended June 30,						% Change			% of Segment Sales
	2023			2022						2023			2022
	(in thousands)
Adjusted EBITDAP
Systems & Support	$	52,149		$	40,149			29.9	%		18.0	%		15.8	%
Interiors		(1,893	)		16,580			(111.4	)%		(5.2	)%		14.8	%
Corporate		(14,545	)		(13,949	)		(4.3	)%	n/a			n/a
	$	35,711		$	42,780			(16.5	)%		10.9	%		11.7	%

Systems & Support:

Net Sales

Net sales adjusted for intersegment sales increased by $35.9 million, or 14.1%, all of which was organic, and included growth across all end markets, with the exception of Military Aftermarket, which declined slightly due to ~~experience~~timing of orders. Net sales increased primarily as a ~~higher proportion~~result of ~~our sales mix in~~ the continued market recovery driving volume for both commercial ~~aerospace end market for Integrated Systems~~OEM and ~~Precision Components~~aftermarket sales.

Operating Income and Adjusted EBITDAP

Operating income increased by $12.6 million , or 38.1%, all of which was organic. Operating income increased primarily due to the 737, 777, 787, A320 and A350 programs. We have experienced a decline in the commercial aerospace end market for Aerospace Structures due to lower production rates of the 747-8 and a decrease in our military end market due to the wind-down of the C-17 program, although there can be no assurance to that effect.

Three Months Ended December 31, % of Total
Sales
2017 2016 % Change 2017 2016
(in thousands)
NET SALES
Integrated Systems $ 239,198
$ 256,080
(6.6 )% 30.9 % 30.3 %
Aerospace Structures 282,495
304,235
(7.1 )% 36.4 % 36.0 %
Precision Components 219,675
226,294
(2.9 )% 28.3 % 26.8 %
Product Support 68,039
87,292
(22.1 )% 8.8 % 10.3 %
Elimination of inter-segment sales (34,161 ) (29,038 ) 17.6 % (4.4 )% (3.4 )%
Total Net Sales $ 775,246
$ 844,863
(8.2 )% 100.0 % 100.0 %

~~Table Of Contents~~

~~Management's Discussion and Analysis of~~

~~Financial Condition and Results of Operations~~

~~(continued)~~

Three Months Ended December 31, % of Segment
Sales
2017 2016 % Change 2017 2016
(in thousands)
SEGMENT OPERATING INCOME
Integrated Systems $ 42,667
$ 51,596
(17.3 )% 17.8 % 20.1 %
Aerospace Structures 12,022
23,867
(49.6 )% 4.3 % 7.8 %
Precision Components (186,225 ) 2,942
(6,429.9 )% (84.8 )% 1.3 %
Product Support 12,399
14,662
(15.4 )% 18.2 % 16.8 %
Corporate (567 ) (37,901 ) 98.5 % n/a
n/a
Total Operating Income $ (119,704 ) $ 55,166
(317.0 )% (15.4 )% 6.5 %

Three Months Ended December 31, % of Segment
Sales
2017 2016 % Change 2017 2016
(in thousands)
Adjusted EBITDA
Integrated Systems $ 39,351
$ 53,734
(26.8 )% 16.5 % 21.0 %
Aerospace Structures 9,718
20,704
(53.1 )% 3.4 % 6.8 %
Precision Components 12,346
16,468
(25.0 )% 5.6 % 7.3 %
Product Support 14,062
16,956
(17.1 )% 20.7 % 19.4 %
Corporate (15,225 ) (23,221 ) 34.4 % n/a
n/a
$ 60,252
$ 84,641
(28.8 )% 7.8 % 10.0 %

~~Integrated Systems:~~ ~~Integrated Systems net~~gross profit on increased sales decreased by $16.9 million, or 6.6%, to $239.2 million for the three months ended December 31, 2017, from $256.1 million for the three months ended December 31, 2016. Organic sales decreased $6.4 million, or 2.6%. The Embee divestiture contributed $10.5 million to the net sales decrease from the three months ended December 31, 2016. Organic sales declined primarily due to rate reductions on 777 and A380 programs and timing of deliveries on other key commercial and military programs.

Integrated Systems cost of sales decreased by $5.9 million, or 3.5%, to $163.6 million for the three months ended December 31, 2017, from $169.5 million for the three months ended December 31, 2016. Organic cost of sales increased $1.0 million, or 0.6%. The Embee divestitures contributed $6.9 million to the decrease cost of sales from the comparative prior year period. The organic cost of sales inclined due to the decrease in net sales, as noteddescribed above. The ~~comparable organic gross margin for the three months ended December 31, 2017 was 31.6% compared with 33.8% for the three months ended December 31, 2016.~~

Integrated Systems operating income decreased by $8.9 million, or 17.3%, to $42.7 million for the three months ended December 31, 2017, from $51.6 million for the three months ended December 31, 2016. Organic operating income decreased $8.0 million, or 15.9%. The Embee divestiture contributed $0.9 million to the operating income decrease to the comparative prior year period. Operating income decreased for the three months ended December 31, 2017, due to the decreaseincrease in ~~net sales, as noted above and increased restructuring costs of $0.6 million. The decreased~~ Adjusted ~~EBITDA~~EBITDAP year over year is due to the same factors that ~~decreased~~increased operating income.

~~Integrated Systems operating~~ Gross profit for the three months ended June 30, 2022, included $5.3 million benefit from the AMJP grant.

Operating Margin and Adjusted EBITDAP Margin

Operating income as a percentage of sales and Adjusted EBITDAP as a percentage of segment sales decreased to 17.8% for the three months ended December 31, 2017, as compared to 20.1% for the three months ended December 31, 2016. These same factors noted above affecting the Adjusted EBITDA contributedboth increased due to the ~~decreased Adjusted EBITDA margin year over year.~~

~~Aerospace Structures:~~ ~~Aerospace Structures~~factors described above.

Interiors:

Net Sales

Organic net sales ~~decreased~~increased by ~~$21.7~~$3.3 million, or ~~7.1%~~10.4%, excluding the sales decreases from divestitures and exited or sunsetting programs of $61.4 million. Organic net sales increased primarily due to ~~$282.5~~increased OEM volume on the 737 and 787 programs.

Operating Income and Adjusted EBITDAP

Organic operating income increased by $4.8 million, ~~for the three months ended December 31, 2017, from $304.2 million for the three months ended December 31, 2016. Sales decreased~~ primarily due to the ~~completion of and continued rate reductions~~increased gross margins on ~~certain Boeing programs and partially~~the organic sales increases noted above. The increased organic operating income was offset by ~~rate increases on 767/Tanker program. Net sales for~~decreased operating income from divestitures and exited or sunsetting programs by approximately $5.0 million. The decrease in Adjusted EBITDAP year over year is driven by the ~~three months ended December 31, 2017 included $2.8 million~~decreased Adjusted EBITDAP from divestitures and exited or sunsetting programs of approximately $22.8 million. Adjusted EBITDAP increased organically in ~~total non-recurring revenues, as compared to $5.6 million~~line with the increase in ~~total non-recurring revenues for the three months ended December 31, 2016.~~

organic operating income.

Operating Margin and Adjusted EBITDAP Margin

~~Table Of Contents~~

Management's Discussion and Analysis of

Financial Condition and Results of Operations

(continued)

Aerospace Structures cost of sales decreased by $10.3 million, or 4.0%, to $244.7 million for the three months ended December 31, 2017, from $254.9 million for the three months ended December 31, 2016. The comparable gross margin for the three months ended December 31, 2017 was 13.4% compared with 16.2% for the three months ended December 31, 2016, the decline in gross margin was affected by the decreased sales noted above.

Aerospace Structures cost of sales for the three months ended December 31, 2017 included net favorable cumulative catch-up adjustments on long-term contracts of $5.3 million. The cumulative catch-up adjustments to gross margin for the three months ended December 31, 2017 included gross favorable adjustments of $26.4 million and gross unfavorable adjustments of $21.1 million. Segment cost of sales for the three months ended December 31, 2016 included net favorable cumulative catch-up adjustments of $2.1 million.

Aerospace Structures operating income decreased by $11.8 million, or 49.6%, to $12.0 million for the three months ended December 31, 2017, from $23.9 million for the three months ended December 31, 2016.

Operating income decreased for the three months ended December 31, 2017, due to the decreased sales noted above, increased net customer financing fees of $1.2 million, increased research and development of $1.3 million and increased amortization expense of $1.7 million due to the change in estimated useful life of certain intangible assets. The decrease in Adjusted EBITDA year over year is due to the same factors that decreased operating income.

Aerospace Structures operating income as a percentage of segment sales decreased to 4.3% for the nine months ended December 31, 2017, as compared to 7.8% for the nine months ended December 31, 2016, due to the decrease in operating income as noted above. The Adjusted EBITDA margin year over year is comparable to the prior year period.

~~Precision Components:~~ Precision Components net sales decreased by $6.6 million, or 2.9%, to $219.7 million for the three months ended December 31, 2017, from $226.3 million for the three months ended December 31, 2016. The decline in sales was primarily driven by production rate.

Precision Components cost of sales decreased by $5.9 million, or 3.0%, to $189.2 million for the three months ended December 31, 2017, from $195.1 million for the three months ended December 31, 2016. Gross margin for the three months ended December 31, 2017 was 13.9%, compared with 13.8% for the three months ended December 31, 2016.

~~Precision Components operating income decreased by $189.2 million, or 6,429.9%, to an operating~~ loss of $186.2 million for the three months ended December 31, 2017, from operating income of $2.9 million for the three months ended December 31, 2016, due to the previously mentioned goodwill impairment charge of $190.2 million, partially offset decreased restructuring charges of $1.2 million compared to the prior year period. The Adjusted EBITDA decreased year over year due to the decreased sales as noted above.

Precision Components operating income as a percentage of segment sales decreased to (84.8)% for the three months ended December 31, 2017, as compared to 1.3% for the three months ended December 31, 2016, due to the goodwill impairment charge as noted above. The Adjusted EBITDA margin year over year was affected by the same factors that decreased the Adjusted EBITDA.

~~Product Support:~~ Product Support net sales decreased by $19.3 million, or 22.1%, to $68.0 million for the three months ended December 31, 2017, from $87.3 million for the three months ended December 31, 2016. Organic sales increased $5.8 million, or 9.4%, due to increased demand from OEM customers. The divestiture of Engines and APU contributed $25.1 million to net sales for the three months ended December 31, 2016.

Product Support cost of sales decreased by $14.4 million, or 22.8%, to $48.9 million for the three months ended December 31, 2017, from $63.4 million for the three months ended December 31, 2016. Organic cost of sales increased $4.3 million, or 9.5%. The divestiture of Engines and APU contributed $18.7 million in cost of sales to the three months ended December 31, 2016. Gross margin for the three months ended December 31, 2017 was 28.1% compared to 28.2% for the three months ended December 31, 2016.

Product Support operating income decreased by $2.3 million, or 15.4%, to $12.4 million for the three months ended December 31, 2017, from $14.7 million for the three months ended December 31, 2016. Organic operating income increased $2.2 million or 22.0%, due to the increased organic sales noted above. The divestiture of Engines and APU contributed $4.5 million operating income for the three months ended December 31, 2016. The decrease in Adjusted EBITDA year over year is due to the divestiture of Engines and APU.

~~Table Of Contents~~

~~Management's Discussion and Analysis of~~

~~Financial Condition and Results of Operations~~

~~(continued)~~

~~Product Support operating income~~ as a percentage of segment sales increased ~~to 18.2% for the three months ended December 31, 2017,~~primarily as compared to 16.8% for the three months ended December 31, 2016. The Adjusted EBITDA margin was 20.7% for the three months ended December 31, 2017, as compared to 19.4% for the three months ended December 31, 2016.

~~Nine months ended~~ ~~December 31, 2017~~ ~~compared to~~ ~~nine~~ ~~months ended~~ ~~December 31, 2016~~

Nine Months Ended December 31,
2017 2016
(dollars in thousands)
Net sales $ 2,302,091
$ 2,612,885
Segment operating income $ (3,607 ) $ 253,486
Corporate expense (78,840 ) (81,107 )
Total operating income (82,447 ) 172,379
Interest expense and other 72,229
55,721
Income tax (benefit) expense (34,115 ) 32,786
Net (loss) income $ (120,561 ) $ 83,872

~~Net sales~~ ~~decreased~~ by ~~$310.8 million, or~~ ~~11.9%, to~~ ~~$2.3 billion~~ ~~for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2017, from~~ ~~$2.6 billion~~ ~~for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2016. Organic sales adjusted for inter-segment sales decreased $226.2 million, or 9.0%. The fiscal 2017 and Embee divestitures contributed $84.6 million to the net sales decrease as compared to the~~ ~~nine~~ ~~months ended December 31, 2016. Organic sales decreased primarily due to the completion~~a result of and continued rate reductions on certain Boeing and Gulfstream programs, along with the timing of deliveries on certain programs. These factors were partially offset by increased production on the 767/Tanker program. Net sales for the nine months ended December 31, 2017, included $7.0 million in total non-recurring revenues, as compared to $15.9 million in non-recurring revenues for the nine months ended December 31, 2016.

~~Cost of sales~~ ~~decreased$231.4 million, or~~ ~~11.3%, to~~ ~~$1.8 billion~~ ~~for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2017, from~~ ~~$2.1 billion~~ ~~for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2016. Organic cost of sales decreased $169.3 million, or 8.1%. The fiscal 2017 and Embee divestitures contributed $62.1 million to the cost of sales decrease as compared to the~~ ~~nine~~ ~~months ended December 31, 2016. Organic cost of sales decreased due to~~ the decrease in ~~organic sales mentioned above. The organic gross margin for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2017~~ was 20.8%, as compared to 21.2% for the nine months ended December 31, 2016. The organic gross margin for the nine months ended December 31, 2017, decreased compared to the comparable prior year period due to the completion of certain Boeing and Gulfstream programs as noted above.

Gross margin included net favorable cumulative catch-up adjustments on long-term contracts of $12.0 million. The cumulative catch-up adjustments to gross margin included gross favorable adjustments of $65.7 million and gross unfavorable adjustments of $53.7 million. Gross margin for the nine months ended December 31, 2016 included net unfavorable cumulative catch-up adjustments of ~~$6.3 million~~.

~~Segment operating income~~ ~~decreased~~ by ~~$257.1 million, or~~ ~~101.4%, to~~ ~~$3.6 million~~ ~~for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2017, from~~ ~~$253.5 million~~ ~~for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2016. Organic segment operating income decreased $53.7 million, or 22.4%. The fiscal 2017 and Embee divestitures contributed $13.2 million to the operating income decrease as compared to the~~ ~~nine~~ ~~months ended December 31, 2016. Organic operating income for the~~ ~~nine~~ months ended December 31, 2017 decreased due to the decline in sales noted above as well as the previously mentioned goodwill impairment charge of $190.2 million and increased restructuring of $4.3 million.

~~Corporate expenses were~~ ~~$78.8 million~~ ~~for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2017, as compared to~~ ~~$81.1 million~~ ~~for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2016~~. The increase in corporate expenses of $2.3 million, or 2.8%, was due to the loss on divestitures of $20.4 million, restructuring charges of $1.3 million and an increase in compensation accruals as compared to the prior year period of $6.7 million, partially offset by an OPEB settlement gain of $15.1 million.

~~Table Of Contents~~

~~Management's Discussion and Analysis of~~

~~Financial Condition and Results of Operations~~

~~(continued)~~

~~Interest expense and other~~ ~~increased~~ by ~~$16.5 million, or~~ ~~29.6%, to~~ ~~$72.2 million~~ ~~for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2017, compared to~~ ~~$55.7 million~~ ~~for the~~ ~~nine~~ months ended December 31, 2016, due to higher interest rates, the impairment of deferred financing fees due to the amendment to the Credit Facility and the extinguishment of the Term Loan of approximately $5.2 million and the unfavorable net change in foreign exchange rate gain/loss of approximately $8.1 million compared to the prior year period.

~~The effective income tax rate for the nine months ended December 31, 2017 was 22.1% compared to 28.1% for the nine months ended December 31, 2016. For the~~ ~~nine~~ months ended December 31, 2017, the effective tax rate reflected a $22.4 million tax benefit from the Tax Act, a $4.8 million tax benefit from the return to provision true up adjustment, the impact of the non-deductible portion of the goodwill impairment, the partial reversal of previously established valuation allowance related to the current year activity, as well as the disallowed capital loss generated from the divestiture of Embee. For the nine months ended December 31, 2016, the income tax provision reflected the disallowed tax benefit of $1.3 million related to the capital loss generated from the divestiture of Newport News.

~~Table Of Contents~~

~~Management's Discussion and Analysis of~~

~~Financial Condition and Results of Operations~~

~~(continued)~~

~~Business Segment Performance - Nine months ended December 31, 2017 compared to nine months ended December 31, 2016~~

Nine Months Ended December 31,
2017 2016
Integrated Systems
Commercial aerospace 16.6 % 15.0 %
Military 10.6 % 10.2 %
Business Jets 1.7 % 1.7 %
Regional 1.0 % 1.0 %
Non-aviation 0.8 % 1.0 %
Total Integrated Systems net sales 30.7 % 28.9 %
Aerospace Structures
Commercial aerospace 16.1 % 16.7 %
Military 3.1 % 5.5 %
Business Jets 14.9 % 13.6 %
Total Aerospace Structures net sales 34.2 % 35.9 %
Precision Components
Commercial aerospace 17.8 % 17.9 %
Military 5.5 % 4.7 %
Business Jets 1.9 % 2.0 %
Regional 0.6 % 0.5 %
Non-aviation 0.7 % 0.4 %
Total Precision Components net sales 26.5 % 25.5 %
Product Support
Commercial aerospace 7.2 % 7.5 %
Military 0.9 % 1.5 %
Business Jets — % — %
Total Product Support net sales 8.6 % 9.7 %
Total Consolidated net sales 100.0 % 100.0 %

We continue to experience a higher proportion of our sales mix in the commercial aerospace end market for Integrated Systems and Precision Components due to the 737, 777, 787, A320 and A350 programs. We have experienced a decline in the commercial aerospace end market for Aerospace Structures due to lower production rates of the 747-8 and a decrease in our military end market due to the wind-down of the C-17 program. We expect to see continued growth in our Business Jet end market sales as the Bombardier Global 7000 program begins to deliver production units, although there can be no assurance to that effect.

~~Table Of Contents~~

~~Management's Discussion and Analysis of~~

~~Financial Condition and Results of Operations~~

~~(continued)~~

Nine Months Ended December 31, % of Total
Sales
2017 2016 % Change 2017 2016
(in thousands)
NET SALES
Integrated Systems $ 711,099
$ 758,803
(6.3 )% 30.9 % 29.0 %
Aerospace Structures 807,754
956,114
(15.5 )% 35.1 % 36.6 %
Precision Components 685,701
740,354
(7.4 )% 29.8 % 28.3 %
Product Support 202,839
257,317
(21.2 )% 8.8 % 9.8 %
Elimination of inter-segment sales (105,302 ) (99,703 ) 5.6 % (4.6 )% (3.8 )%
Total Net Sales $ 2,302,091
$ 2,612,885
(11.9 )% 100.0 % 100.0 %

Nine Months Ended December 31, % of Segment
Sales
2017 2016 % Change 2017 2016
(in thousands)
SEGMENT OPERATING INCOME
Integrated Systems $ 132,171
$ 145,379
(9.1 )% 18.6 % 19.2 %
Aerospace Structures 23,253
57,898
(59.8 )% 2.9 % 6.1 %
Precision Components (191,100 ) 7,223
(2,745.7 )% (27.9 )% 1.0 %
Product Support 32,069
42,986
(25.4 )% 15.8 % 16.7 %
Corporate (78,840 ) (81,107 ) 2.8 % n/a
n/a
Total Operating Income $ (82,447 ) $ 172,379
(147.8 )% (3.6 )% 6.6 %

Nine Months Ended December 31, % of Segment
Sales
2017 2016 % Change 2017 2016
(in thousands)
Adjusted EBITDA
Integrated Systems $ 131,793
$ 148,506
(11.3 )% 18.5 % 19.6 %
Aerospace Structures 20,422
51,997
(60.7 )% 2.5 % 5.4 %
Precision Components 23,673
47,827
(50.5 )% 3.5 % 6.5 %
Product Support 37,137
50,216
(26.0 )% 18.3 % 19.5 %
Corporate (71,994 ) (60,994 ) (18.0 )% n/a
n/a
$ 141,031
$ 237,552
(40.6 )% 6.1 % 9.1 %

~~Integrated Systems:~~ ~~Integrated Systems~~ net sales ~~decreased by $47.7 million,~~from divestitures and exited or ~~6.3%, to $711.1 million for the~~ ~~nine~~ ~~months ended December 31, 2017, from $758.8 million for the~~ ~~nine~~ ~~months ended December 31, 2016. Organic sales decreased $25.7 million, or 3.6%. The Newport News and Embee divestitures contributed $22.0 million to the net sales decrease as compared to the~~ ~~nine~~ ~~months ended December 31, 2016. Organic sales declined primarily due to rate reductions on A380 and 777~~sunsetting programs ~~and timing of deliveries on other key commercial and military programs, partially offset by increased sales on 737 program.~~

Integrated Systems cost of sales decreased by $30.2 million, or 6.0%, to $471.2 million for the nine months ended December 31, 2017, from $501.3 million for the nine months ended December 31, 2016. Organic cost of sales decreased $15.8 million, or 3.3%. The Newport News and Embee divestitures contributed $14.4 million to the cost of sales decrease as compared to the ~~nine~~ ~~months ended December 31, 2016. The organic cost of sales decreased due to the net sales decrease~~ noted above. ~~The organic gross margin for the nine months ended December 31, 2017 was 33.9% compared with 34.1% for the nine~~

~~Table Of Contents~~

~~Management's Discussion and Analysis of~~

~~Financial Condition and Results of Operations~~

~~(continued)~~

~~months ended December 31, 2016. The decrease in gross margin for the nine months ended December 31, 2017 is due to product mix.~~

Integrated Systems operating income decreased by $13.2 million, or 9.1%, to $132.2 million for the nine months ended December 31, 2017, from $145.4 million for the nine months ended December 31, 2016. Organic operating income decreased $10.3 million, or 7.2%. The Newport News and Embee divestitures contributed $2.9 million to the operating income decrease for the ~~nine~~ ~~months ended December 31, 2016. Operating income decreased for the nine months ended December 31, 2017, due to the decline in sales and gross margin as noted above.~~ The decrease in Adjusted ~~EBITDA year over year~~EBITDAP margin is ~~due to the same factors that decreased operating income.~~

Integrated Systems operating income as a percentage of segment sales decreased to 18.6% for the nine months ended December 31, 2017, as compared to 19.2% for the nine months ended December 31, 2016, due to the decreased gross margin as noted above. These same factors noted above affecting the Adjusted EBITDA contributed to the decreased Adjusted EBITDA margin year over year.

~~Aerospace Structures:~~ ~~Aerospace Structures net sales decreased by $148.4 million, or 15.5%, to $807.8 million for the~~ ~~nine~~ ~~months ended December 31, 2017, from $956.1 million for the~~ ~~nine~~ months ended December 31, 2016. Sales decreased primarily due to the completion of and continued rate reductions on certain Boeing and Gulfstream programs and partially offset by rate increases on 767/Tanker and Global Hawk/Triton programs. Net sales for the nine months ended December 31, 2017 included $7.0 million in total non-recurring revenues, as compared to $15.9 million in total non-recurring revenues for the nine months ended December 31, 2016.

Aerospace Structures cost of sales decreased by $117.4 million, or 14.3%, to $703.5 million for the nine months ended December 31, 2017, from $820.8 million for the nine months ended December 31, 2016. The cost of sales were negatively impacted by the decreased sales as noted above. The comparable gross margin for the nine months ended December 31, 2017 was 12.9% compared with 14.2% for the nine months ended December 31, 2016. The decreased gross margin for the nine months ended December 31, 2017 is due to the change in product mix.

Aerospace Structures cost of sales for the nine months ended December 31, 2017 included net favorable cumulative catch-up adjustments of $12.0 million. The cumulative catch-up adjustments to gross margin for the nine months ended December 31, 2017 included gross favorable adjustments of $65.7 million and gross unfavorable adjustments of $53.7 million. Segment cost of sales for the nine months ended December 31, 2016 included net unfavorable cumulative catch-up adjustments of $6.3 million.

Aerospace Structures operating income decreased by $34.6 million, or 59.8%, to $23.3 million for the nine months ended December 31, 2017, compared to $57.9 million for the nine months ended December 31, 2016. Operating income decreased for the nine months ended December 31, 2017, due to the decline in sales as noted above, increased net customer financing fees of $1.2 million, increased legal expenses of $1.8 million and increased amortization expense of $5.0 million due to the change in estimated useful life of certain intangible assets. The decrease in Adjusted EBITDA year over year is due to the same factors that decreased operating income.

Aerospace Structures operating income as a percentage of segment sales decreased to 2.9% for the nine months ended December 31, 2017, as compared to 6.1% for the nine months ended December 31, 2016, due to the decrease in operating income as noted above. These same factors contributed to the decreased Adjusted EBITDA margin year over year.

~~Precision Components:~~ Precision Components net sales decreased by $54.7 million, or 7.4%, to $685.7 million for the nine months ended December 31, 2017, from $740.4 million for the nine months ended December 31, 2016. The decline in sales was primarily driven ~~by production rate and step down pricing on 777 program and step down pricing on the 787 program, partially offset by increased production on the A350 program.~~

~~Precision Components cost of sales decreased by $41.7 million, or 6.5%, to $602.6 million for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2017, from~~ ~~$644.3 million~~ ~~for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2016. The cost of sales decreased due to the decline in sales as noted above. The gross margin for the~~ ~~nine~~ ~~months ended December 31, 2017 was 12.1%, compared with 13.0% for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2016. The gross margin declined for the~~ ~~nine~~ ~~months ended December 31, 2017, due to the decline in sales noted above.~~

~~Precision Components operating income decreased by~~ ~~$198.3 million, or~~ ~~2,745.7%, to an operating loss of~~ ~~$191.1 million~~ ~~for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2017, from operating income of~~ ~~$7.2 million~~ ~~for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2016. The operating loss~~ ~~nine~~ ~~months ended December 31, 2017, was the result of the decreased sales, as noted above, the~~

~~Table Of Contents~~

~~Management's Discussion and Analysis of~~

~~Financial Condition and Results of Operations~~

~~(continued)~~

previously mentioned goodwill impairment charge of $190.2 million and by increased restructuring costs of $5.0 million. The Adjusted EBITDA decreased year over year due to the decreased sales noted above.

~~Precision Components operating loss as a percentage of segment sales declined to~~ ~~(27.9)%~~ ~~for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2017, as compared to~~ ~~1.0%~~ ~~for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2016, due to the goodwill impairment noted above. The Adjusted EBITDA margin year over year was affected~~ by the same ~~factors that decreased the Adjusted EBITDA.~~

~~Product Support:~~ ~~Product Support net sales decreased by $54.5 million, or 21.2%, to $202.8 million for the~~ ~~nine~~ ~~months ended December 31, 2017, from~~ ~~$257.3 million~~ ~~for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2016. Organic sales increased $8.0 million, or 4.3%, due to increased demand from OEM customers. The divestiture of Engines and APU contributed $62.5 million to net sales for the~~ ~~nine~~ ~~months ended December 31, 2016.~~

~~Product Support cost of sales decreased by $37.3 million, or 20.0%, to $149.6 million for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2017~~, from $186.9 million for the nine months ended December 31, 2016. Organic cost of sales increased $10.4 million, or 7.8%. Organic cost of sales did not increase in proportion to the increase in sales due to sales mix. The divestiture of Engines and APU contributed $47.7 million in cost of sales to the ~~nine~~ ~~months ended December 31, 2016. Organic gross margin for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2017~~ ~~was 26.6% compared to 29.0% for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2016~~.

~~Product Support operating income~~ ~~decreased~~ by ~~$10.9 million, or~~ ~~25.4%, to~~ ~~$32.1 million~~ ~~for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2017, from~~ ~~$43.0 million~~ ~~for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2016. Organic operating income decreased $0.6 million or 2.0%, due to the decreased gross profit noted above. The divestiture of Engines and APU contributed $10.3 million operating income for the~~ ~~nine~~ ~~months ended December 31, 2016. These same factors contributed to the decrease in Adjusted EBITDA year over year.~~

~~Product Support operating income as a percentage of segment sales decreased to~~ ~~15.8%~~ ~~for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2017, as compared to 16.7% for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2016, due to the decreased gross profit noted above. These same factors contributed to the decreased Adjusted EBITDA margin year over year.~~

factors.

Liquidity and Capital Resources

Operating Cash Flows

Our working capital needs are generally funded through our current cash and cash equivalents, cash flows from operations, and ~~borrowings under our credit arrangements.~~the availability of proceeds from the Securitization Facility. During the ~~nine~~three months ended ~~December 31, 2017,~~June 30, 2023, we ~~used approximately $198.3~~had a net cash outflow of $63.7 million ~~of cash flows~~ from operating activities ~~received approximately $36.5~~compared with a net cash outflow of $93.0 million ~~in investing activities and received approximately $158.2 million in financing activities.~~

for the three months ended June 30, 2022, an improvement of $29.2 million. Cash flows ~~used in operating activities for the nine months ended December 31, 2017~~ were $198.3 million, compared to cash flows used in operating activities for the nine months ended December 31, 2016 of $172.7 million. During the nine months ended December 31, 2017, net cash used in operating activities was primarily ~~due the timing of payments on accounts payable and other accrued expenses of $373.4 million~~ driven by timing of payables ~~to suppliers, offset by decreased receipts from customers~~as well as increases in inventory as a result of ~~$321.4 million due to decreased utilization~~anticipated increasing demand and certain supply chain constraints that we expect will largely recover in the latter half of the ~~receivables purchase agreement and decreased sales.~~

We continue to invest in inventory for new programs which impacts our cash flows from operating activities. During the nine months ended December 31, 2017, inventory build for capitalized pre-production costs on new programs excluding progress payments, including the Bombardier Global 7000/8000 program and the Embraer E-Jet, were $80.6 million and $6.0 million, respectively. Additionally, the cash utilization for production inventory build, including build ahead on several programs subject to relocation, was approximately $286.9 million. Total customer advances, including unliquidated progress payments netted against inventory which are included in cashfiscal year. Cash flows from operations ~~increased $251.1~~are consistent with seasonal working capital needs, and we expect improvement in the remainder of fiscal 2024. Interest payments were approximately $0.5 million for the three months ended June 30, 2023, as compared with $25.9 million for the three months ended June 30, 2022. The decrease in interest payments is primarily ~~due to~~the result of timing as interest payments under our Senior Notes are paid in our second and fourth fiscal quarters.

As disclosed in Note 2, in November 2021 the Company entered into an agreement with the DOT under the AMJP. We received total proceeds under this program of $19.4 million, of which approximately $8.8 million was received in the three months ended June 30, 2022. These cash receipts ~~and resolution of open assertions.~~

are classified within cash from operations.

Investing Cash Flows

Cash flows used in investing activities for the ~~nine~~three months ended ~~December 31, 2017~~June 30, 2023, increased ~~$46.4~~$9.4 million from the ~~nine~~three months ended ~~December 31, 2016.~~June 30, 2022. Cash flows used in investing activities for the ~~nine~~three months ended ~~December 31, 2017,~~June 30, 2023, included payments related to the sales of assets and businesses of $6.8 million as a result of the resolution of claims by the buyer related to the accounts payable representation and warranty under the purchase agreement and the finalization of certain purchase price adjustments related to the transferred working capital of the divested operations, as described in Note 3 and Note 12. We also used approximately $6.4 million for capital expenditures ~~of $31.9~~and $1.5 million ~~and proceeds from the sale of assets of $68.4 million.~~related to capital contributions to a joint venture. Cash flows used in investing activities for the ~~nine~~three months ended ~~December 31, 2016,~~June 30, 2022, included ~~capital expenditures of $33.1 million and proceeds from~~payments on the sale of assets and businesses of ~~$23.2~~$2.3 million with additional investing outflows from capital expenditures of $3.0 million.

We currently expect full year capital expenditures in fiscal 2023 to be in the range of $25.0 million. The majority of our planned fiscal 2024 capital expenditures are capital investments designed to improve our manufacturing efficiency and expand our capabilities.

Financing Cash Flows

Cash flows ~~provided by~~used in financing activities for the ~~nine~~three months ended ~~December 31, 2017~~June 30, 2023, were ~~$158.2~~$2.2 million, compared towith cash flows used in financing activities for the ~~nine~~three months ended ~~December 31, 2016~~June 30, 2022, of ~~$198.6~~$4.4 million. ~~Cash~~Current period financing cash flows

~~Table Of Contents~~

~~Management's Discussion~~ pertain primarily to payments pertaining to costs incurred in conjunction with our March 2023 refinancing, borrowings and ~~Analysis~~payments under finance leases, and the repurchase of

~~Financial Condition~~ common stock to satisfy employee tax withholding obligations resulting from equity compensation. As of June 30, 2023, we had $146.3 million of cash on hand and ~~Results~~$63.8 million was available under our Securitization Facility after giving effect to approximately $19.7 million in outstanding letters of ~~Operations~~

~~(continued)~~

~~provided by financing activities~~credit, all of which were accruing interest at 0.125% per annum, and the current outstanding balance.

As disclosed in Note 9, we contributed 3.2 million shares of common stock to the trust of our U.S. defined benefit plan. As a result of the contribution, we expect the approximately $14.7 million required cash contribution to our U.S. defined benefit pension plans for the ~~nine months ended December~~fiscal year ending March 31, ~~2017~~2024, to be reduced to zero, and ~~2016, respectively, included~~ the excess contribution value will reduce future required cash contributions.

As disclosed in Note 2, subsequent to June 30, 2023, approximately 6.7 million warrants were exercised for total cash proceeds, net of transaction costs, of approximately $81,500. On July 6, 2023, the Company redeemed all of the approximately 11.4 million remaining outstanding Warrants for a total redemption price of less than $0.1 million pursuant to its June 16, 2023 notice of redemption. In total, from the issuance of the Warrants on December 19, 2022, through redemption on July 6, 2023, the Company increased its cash by approximately $85.0 million and reduced debt by approximately $14.0 million.

Refer to Note 12 for disclosures related to certain indemnifications, consent-to-assignment agreements, and guarantee agreements associated with our divestiture activities.

The Senior Notes ~~due 2025 of $500.0 million, offset by repayment of the 2013 Term Loan of $302.3 million, payment of financing fees $17.7 million and additional borrowings on~~are our ~~Credit Facility (as defined below).~~

~~As of~~ ~~December 31, 2017~~, ~~$719.8 million~~ ~~was available under our revolving credit facility (the “Credit Facility”) after consideration of covenant limitations. On~~ ~~December 31, 2017, an aggregate amount of approximately~~ ~~$50.0 million~~ was outstanding under the Credit Facility, all of which was accruing interest at LIBOR plus applicable basis points totaling 3.50% per annum. Amounts repaid under the Credit Facility may be reborrowed.

At ~~December 31, 2017, there was~~ ~~$109.2 million~~ outstanding under our receivable securitization facility ("Securitization Facility"). Interest rates on the Securitization Facility are based on prevailing market rates for short-term commercial paper, plus a program fee and a commitment fee. The Securitization Facility's net availability is not impacted by the borrowing capacity of the Credit Facility.

In July 2017, the Company entered into a Ninth Amendment to the Credit Agreement (the “Ninth Amendment” and the Existing Credit Agreement as amended by the Ninth Amendment, the “Credit Agreement”) with the Administrative Agent and the Lenders party thereto to, among other things, (i) permit the Company to incur High Yield Indebtedness (as defined in the Credit Agreement) in an aggregate principal amount of up to $500.0 million, subject to the Company’s obligations to apply the net proceeds from this offering to repay the outstanding principal amount of the term loans in full, (ii) limit the mandatory prepayment provisions to eliminate the requirement that net proceeds received from the incurrence of Permitted Indebtedness (as defined in the Credit Agreement), including the High Yield Indebtedness, be applied to reduce the revolving credit commitments once the revolving credit commitments have been reduced to $800.0 million, (iii) amend certain covenants and other terms and (iv) modify the current interest rate and letter of credit pricing tiers.

The Credit Facility also provided for a variable rate term loan (the "2013 Term Loan"). The Company repaid the outstanding principal amount of the 2013 Term Loan in quarterly installments, on the first business day of each January, April, July and October. The 2013 Term Loan was paid in full with the proceeds from the Senior Notes due 2025 (see below).

In May 2017, the Company entered into an Eighth Amendment to the Third Amended and Restated Credit Agreement (the “Eighth Amendment Effective Date”), among the Company and its lenders to, among other things, (i) eliminate the total leverage ratio financial covenant, (ii) increase the maximum permitted senior secured leverage ratio financial covenant applicable to each fiscal quarter, commencing with the fiscal quarter ended March 31, 2017, and to revise the step-downs applicable to such financial covenant, (iii) reduce the aggregate principal amount of commitments under the revolving line of credit to $800.0 million from $1.0 billion, (iv) modify the maturity date of the term loans so that all of the term loans will mature on March 31, 2019, and (v) establish a new higher pricing tier for the interest rate, commitment fee and letter of credit fee pricing provisions.

The Company is currently in compliance with all such covenants. Although the Company does not anticipate any violations of the financial covenants, its ability to comply with these covenants is dependent upon achieving earnings and cash flow projections.

On August 17, 2017, the Company issued $500.0 million principal amount of 7.750% Senior Notes due 2025 (the "2025 Notes"). The 2025 Notes were sold at 100% of principal amount and have an effective interest yield of 7.750%. Interest on the 2025 Notes accrues at the rate of 7.750% per annum and is payable semiannually in cash in arrears on February 15 and August 15 of each year, commencing on February 15, 2018.

~~The 2025 Notes are the Company's senior unsecured~~ obligations and rank equally in right of payment with all of ~~its~~our other existing and future senior ~~unsecured~~ indebtedness and senior in right of payment to all of ~~its~~our existing and future subordinated indebtedness.

The 2028 First Lien Notes are (a) effectively senior to all existing and future second lien obligations (including the 2025 Notes) and all existing and future unsecured indebtedness of the Company and the Guarantor Subsidiaries, but only to the extent of the value of the Collateral, and after giving effect to any permitted additional first lien secured obligations and other permitted liens of senior or equal priority; (b) secured by the Collateral on a pari passu basis with any future permitted additional first lien secured obligations, subject to a Collateral Trust Agreement; (c) effectively subordinated to any existing and future obligations of the

Management's Discussion and Analysis of

Financial Condition and Results of Operations

(continued)

Company and the Guarantor Subsidiaries that are secured by assets that do not constitute the Collateral, in each case, to the extent of the value of the assets securing such obligations; and (d) structurally subordinated to all existing and future indebtedness and other liabilities of the Company’s existing and future subsidiaries that do not guarantee the 2028 First Lien Notes, including the Securitization Facility.

The 2025 Notes are effectively subordinated to all obligations of the Company and the Guarantor Subsidiaries that are (a) secured by a lien on the Collateral (including the 2028 First Lien Notes) and certain cash management and hedging obligations, or (b) secured by assets that do not constitute the Collateral, in each case to the extent of the value of the assets securing such obligations.

The Senior Notes are guaranteed on a full, senior, joint and several basis ~~by each~~certain of the ~~Guarantor Subsidiaries.~~

Company’s domestic restricted subsidiaries (the “Guarantor Subsidiaries”). Currently, our only consolidated subsidiaries that are not guarantors of the Senior Notes (the "Non-Guarantor Subsidiaries") are: (i) the receivables securitization special purpose entity, and (ii) the foreign operating subsidiaries. The ~~Company~~2028 First Lien Notes and the related guarantees are secured by first-priority liens on substantially all of our assets and our subsidiary guarantors, whether now owned or hereafter acquired (the “Collateral”).

Pursuant to the documentation governing the Senior Notes, we may redeem some or all of the ~~2025~~Senior Notes prior to August 15, 2020 by paying a "make-whole" premium. The Company may redeem some or all of the 2025 Notes on or after August 15, 2020, at specified redemption prices. In addition, prior to August 15, 2020, the Company may redeem up to 35% of the 2025 Notes with the net proceeds of certain equity offerings at a redemption price equal to 107.750% of the aggregate principal amount plus accrued and unpaid interest, if any,their stated maturities, subject to certain limitations set forth in the indenture governing the ~~2025~~applicable Senior Notes ~~(the "2025 Indenture").~~

~~Table Of Contents~~

~~Management's Discussion~~ and, ~~Analysis of~~

~~Financial Condition and Results of Operations~~

~~(continued)~~

~~The Company is~~in certain cases, subject to significant prepayment premiums. We are obligated to offer to repurchase the ~~2025~~Senior Notes at ~~a price of (i) 101% of their principal amount plus accrued and unpaid interest, if any,~~specified prices as a result of certain change-of-control events and ~~(ii) 100%~~a sale of ~~their principal amount plus accrued and unpaid interest, if any, in the event~~all or substantially all of ~~certain asset sales.~~our assets. These restrictions and prohibitions are subject to certain qualifications and exceptions.

The ~~2025 Indenture contains~~indentures governing the Senior Notes, as well as Securitization Facility, contain covenants and restrictions that, among other things, limit ~~the Company's~~our ability and the ability of any of the Guarantor Subsidiaries to (i) grant liens on ~~its assets,~~our assets; (ii) make dividend payments, other distributions or other restricted ~~payments,~~payments; (iii) incur restrictions on the ability of the Guarantor Subsidiaries to pay dividends or make other payments or investments; (iv) enter into sale and leaseback ~~transactions,~~transactions; (v) merge, consolidate, transfer or dispose of substantially all of their ~~assets,~~assets; (vi) incur additional ~~indebtedness,~~indebtedness; (vii) use the proceeds from sales of assets, including capital stock of restricted subsidiaries (in the case of the Senior Notes); and (viii) enter into transactions with affiliates.

~~The expected future cash flows for the next five years for long-term~~ We are currently in compliance with all covenants under our debt ~~leases~~documents and ~~other obligations are as follows:~~

Payments Due by Period
(in thousands)
Contractual Obligations Total
Less than
1 year
1-3 years 4-5 years
More than 5
years
Debt principal (1) $ 1,392,497
$ 15,135
$ 135,072
$ 733,777
$ 508,513
Debt interest (2) 305,749
75,201
79,711
78,100
72,737
Operating leases 138,051
26,155
41,417
25,933
44,546
Purchase obligations 1,533,563
1,197,322
275,163
46,720
14,358
Total $ 3,369,860
$ 1,313,813
$ 531,363
$ 884,530
$ 640,154

~~(1) Included~~expect to remain in ~~the Company’s balance sheet at~~ ~~December 31, 2017~~.

~~(2) Includes fixed-rate interest only.~~

~~The above table excludes unrecognized tax benefits of $11.4 million as of~~ ~~December 31, 2017, since we cannot predict with reasonable certainty the timing of cash settlements with the respective taxing authorities.~~

For the fiscal year ending March 31, 2018, the Company is not required to make minimum contributions to its U.S. defined benefit pension plans under the minimum funding requirements of the Employee Retirement Income Security Act of 1974 and the Pension Protection Act of 2006.

~~We believe that cash flows from operations and borrowings under the Credit Facility will be sufficient to meet anticipated cash requirements for our current operations~~compliance for the foreseeable future. ~~However, we are continuously evaluating various acquisition~~

For further information on our long-term debt, see Note 6.

The following tables present summarized financial information of the Company and ~~divestiture opportunities. As~~the Guarantor Subsidiaries on a ~~result, we currently are pursuing~~combined basis. The combined summarized financial information eliminates intercompany balances and transactions among the ~~potential purchase~~Company and the Guarantor Subsidiaries and equity in earnings and investments in any Guarantor Subsidiaries or Non-Guarantor Subsidiaries. The summarized financial information is provided in accordance with the reporting requirements of ~~a number~~Rule 13-01 under SEC Regulation S-X for the issuer and Guarantor Subsidiaries.

Management's Discussion and Analysis of ~~candidates. In the event that more than one~~

Financial Condition and Results of these transactions are successfully consummated, the availability under the Credit Facility might be fully utilized and additional funding sources may be needed. There can be no assurance that such funding sources will be available to us on terms favorable to us, if at all.

Operations

(continued)


Parent and Guarantor Summarized Financial Information	June 30,		March 31,
Summarized Balance Sheet	2023		2023
	in thousands
Assets
Due from non-guarantor subsidiaries	$	3,874	$	1,048
Current assets		604,703		659,991
Noncurrent assets		644,956		648,608
Noncurrent receivable from non-guarantor subsidiaries		89,102		104,956

Liabilities
Due to non-guarantor subsidiaries		28,566		26,793
Current liabilities		306,339		352,270
Noncurrent liabilities		2,045,709		2,107,535

			Three Months Ended
Summarized Statement of Operations			June 30, 2023
			in thousands
Net sales to non-guarantor subsidiaries			$	489
Net sales to unrelated parties				296,782
Gross profit				75,737
Loss from continuing operations before income taxes				(20,149	)
Net loss				(20,380	)

Critical Accounting Policies

~~The Company's~~

Our critical accounting policies are discussed in Management's Discussion and Analysis of Financial Condition and Results of Operations and notes accompanying the ~~condensed~~ consolidated financial statements that appear in the Annual Report on Form 10-K for the fiscal year ended March 31, ~~2017.~~2023. Except as otherwise disclosed in the condensed consolidated financial statements and accompanying notes included in this report, there were no material changes subsequent to the filing of the Annual Report on Form 10-K for the fiscal year ended March 31, ~~2017,~~2023, in ~~the Company's~~our critical accounting policies or in the assumptions or estimates used to prepare the financial information appearing in this report.

~~Table Of Contents~~

~~Management's Discussion and Analysis of~~

~~Financial Condition and Results of Operations~~

~~(continued)~~

Forward-Looking Statements

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 relating to our future operations and prospects, including statements that are based on current projections and expectations about the markets in which we operate, and our beliefs concerning future performance and capital requirements based upon current available information. Such statements are based on our beliefs as well as assumptions made by and information currently available to us. When used in this document, words like “may,” “might,” “will,” “expect,” “anticipate,” “believe,” “potential,” "plan," "estimate," and similar expressions are intended to identify forward-looking statements. Actual results could differ materially from our current expectations. For example, there can be no assurance that additional capital will not be required or that additional capital, if required, will be available on reasonable terms, if at all, at such times and in such amounts as may be needed by us. In addition to these factors, among other factors that could cause actual results to differ materially are uncertainties relating to our ability to execute on our restructuring plans, the integration of acquired businesses, divestitures of our business, efforts to optimize our asset base, general economic conditions affecting our business, dependence of certain of our businesses on certain key customers as well as competitive factors relating to the aviation industry. For a more detailed discussion of these and other factors affecting us, see the risk factors described in our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2017,~~2023, filed with the SEC on May 24, ~~2017.~~

2023, and in our quarterly reports on Form 10-Q.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

For information regarding our exposure to certain market risks, see “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2017.~~2023. There has been no material change in this information during the period covered by this report.

Item 4. Controls and Procedures.

(a) Evaluation of disclosure controls and procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports pursuant to the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As of ~~December 31, 2017~~,June 30, 2023, we completed an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of ~~December 31, 2017~~.

June 30, 2023.

(b) Changes in internal control over financial reporting.

There were no changes that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

~~Table Of Contents~~

~~TRIUMPH GROUP, INC.~~

Part II. Other Information

Item 1. Legal Proceedings.

Not applicable.

Item 1A. Risk Factors.

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2017.~~

2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

~~Not applicable~~.

~~Issuer Purchases of Equity Securities.~~

Not applicable.

Item 3. Defaults Upon Senior ~~Securities~~

Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other ~~Information~~

Information.

Not applicable.

~~Table Of Contents~~

Item 6. Exhibits.



Exhibit 3.1	~~Exhibit 10.1~~		~~Twentieth~~Certificate of Amendment to the ~~Recievable Purchase Agreement~~Amended and Restated Certificate of Incorporation of Triumph Group, Inc. dated ~~as of November 30, 2017 (Incorporated~~July 21, 2023 (incorporated by reference to Exhibit 10.1 to the ~~Company's~~Company’s Current Report on Form 8-K filed on ~~November 7, 2017).~~July 21, 2023)
Exhibit 10.1		Cooperation Agreement, dated as of May 30, 2023, between Triumph Group, Inc. and Vision One Management Partners, LP (incorporated by reference to Exhibit ~~10.2~~		~~Letter Agreement between~~10.1 to the ~~Company and Peter Wick dated January 20, 2018~~Company’s Current Report on Form 8-K filed on May 30, 2023)*
Exhibit 22.1		List of Subsidiary Guarantors and Issuers of Guaranteed Securities.
Exhibit 31.1		Certification by ~~President and~~the Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a).
	Exhibit 31.2		Certification by ~~Senior Vice President and~~the Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a).
	Exhibit 32.1		Certification of ~~Periodic Report by President and~~ Chief Executive Officer ~~Furnished Pursuant to 18 U.S.C. Section 1350 Adopted Pursuant to Section 906 Sarbanes-Oxley Act of 2002.~~
	~~Exhibit 32.2~~		~~Certification of Periodic Report by Senior Vice President~~ and Chief Financial Officer Furnished Pursuant to 18 U.S.C. Section 1350 Adopted Pursuant to Section 906 Sarbanes-Oxley Act of 2002.
	Exhibit 101		The following financial information from Triumph Group, Inc.’s Quarterly Report on Form 10-Q for the quarter ended ~~December 31, 2017~~June 30, 2023, formatted in ~~XBRL:~~iXBRL: (i) Condensed Consolidated Balance Sheets as of ~~December 31, 2017~~June 30, 2023 and March 31, ~~2017;~~2023; (ii) Condensed Consolidated Statements of ~~Income~~Operations for the three ~~and nine~~ months ended ~~December 31, 2017~~June 30, 2023 and ~~2016;~~2022; (iii) Condensed Consolidated Statements of Comprehensive Income for the three ~~and nine~~ months ended ~~December 31, 2017~~June 30, 2023 and ~~2016;~~2022; (iv) Condensed Consolidated Statements of Stockholders' Deficit for the three months ended June 30, 2023 and 2022; (v) Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~December 31, 2017~~June 30, 2023 and ~~2016;~~2022; and ~~(1)~~(vi) Notes to Condensed Consolidated Financial Statements.
Exhibit 104
	*		~~Indicates management contract or compensatory plan or arrangement~~ Cover Page Interactive Data File, formatted as Inline XBRL and contained in Exhibit 101.

* Schedules (as similar attachments) have been omitted from this filing pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule will be furnished to the Securities and Exchange Commission upon request

~~Table Of Contents~~

TRIUMPH GROUP, INC.

~~Signatures~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	Triumph Group, Inc.
(Registrant)		~~(Registrant)~~

		President and Chief Executive Officer		August 11, 2023
/s/ Daniel J. Crowley		~~February 7, 2018~~
	~~Daniel J. Crowley, President, Chief Executive Officer and Director~~
		(Principal Executive Officer)
Daniel J. Crowley
	~~/s/ James F. McCabe, Jr.~~		~~February 7, 2018~~
	~~James F. McCabe, Jr.,~~	Senior Vice President and Chief Financial Officer			August 11, 2023
/s/ James F. McCabe, Jr.		(Principal Financial Officer)
James F. McCabe, Jr.
	~~/s/ Thomas A. Quigley, III~~		~~February 7, 2018~~
	~~Thomas A. Quigley, III,~~	Vice President, ~~and~~ Controller
/s/ Kai W. Kasiguran		(Principal Accounting Officer)		August 11, 2023
Kai W. Kasiguran



~~Delaware~~		~~51-0347963~~

Delaware	51-0347963
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)



~~899 Cassatt Road, Suite 210, Berwyn, PA~~		~~19312~~

555 E Lancaster Avenue, Suite 400, Radnor, Pennsylvania	19087
(Address of principal executive offices)	(Zip Code)




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
Purchase Rights		New York Stock Exchange


	Three Months Ended June 30,
	2023			2022
Operating Activities
Net loss	$	(18,163	)	$	(10,342	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		8,118			9,806
Amortization of acquired contract liability		(575	)		(523	)
Loss on sale of assets and businesses		12,617			—
Gain on modification and extinguishment of debt		(3,391	)		—
Other amortization included in interest expense		1,506			1,562
Provision for credit losses		534			200
Warrants remeasurement gain		(8,001	)		—
Share-based compensation		3,622			1,578
Changes in other assets and liabilities, excluding the effects of acquisitions and divestitures:
Trade and other receivables		32,532			4,474
Contract assets		(10,180	)		(8,638	)
Inventories		(39,818	)		(19,190	)
Prepaid expenses and other current assets		(1,830	)		(7,538	)
Accounts payable, accrued expenses, and contract liabilities		(42,588	)		(56,352	)
Accrued pension and other postretirement benefits		(1,262	)		(8,322	)
Other, net		3,155			255
Net cash used in operating activities		(63,724	)		(93,030	)
Investing Activities
Capital expenditures		(6,401	)		(3,044	)
Payments on sale of assets and businesses		(6,848	)		(2,322	)
Investment in joint venture		(1,515	)		—
Net cash used in investing activities		(14,764	)		(5,366	)
Financing Activities
Proceeds from issuance of long-term debt		2,000			—
Retirement of debt and finance lease obligations		(763	)		(990	)
Payment of deferred financing costs		(1,438	)		—
Payment of common stock issuance costs, net of proceeds		(803	)		—
Repurchase of shares for share-based compensation minimum tax obligation		(1,235	)		(3,442	)
Net cash used in financing activities		(2,239	)		(4,432	)
Effect of exchange rate changes on cash		(358	)		(3,414	)
Net change in cash and cash equivalents		(81,085	)		(106,242	)
Cash and cash equivalents at beginning of period		227,403			240,878
Cash and cash equivalents at end of period	$	146,318		$	134,636



	December 31, 2017
	Weighted- Average Life	Gross Carrying Amount		Accumulated Amortization			Net

Customer relationships	17.0	$	621,524	$	(247,058	)	$	374,466
Product rights, technology and licenses	11.4	55,104		(41,241		)	13,863
Non-compete agreements and other	16.3	2,756		(921		)	1,835
Tradenames	10.0	150,000		(19,344		)	130,656
Total intangibles, net		$	829,384	$	(308,564	)	$	520,820


ý ☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934





Large accelerated filerx	☒	Accelerated filero	☐
Non-accelerated filero ~~(Do not check if a smaller reporting company)~~	☐	Smaller reporting companyo	☐
		Emerging growth companyo	☐



			Page Number
Part I. Financial Information

Item 1.		Financial Statements (Unaudited)

	Condensed Co~~nsolidated~~Consolidated Balance Sheets at ~~December 31, 2017~~June 30, 2023 and March 31, ~~2017~~ 2023		1

	Condensed Consolidated Statements of Operations - Three ~~and nine~~ months ended ~~December 31, 2017~~June 30, 2023 and ~~2016~~ 2022		2

	Condensed Consolidated Statements of Comprehensive ~~Income~~ Loss - Three ~~and nine~~ months ended ~~December 31, 2017~~June 30, 2023 and ~~2016~~ 2022		3
	Condensed Consolidated Statements of Stockholders' Deficit - Three months ended June 30, 2023 and 2022		4
	Condensed Consolidated Statements of Cash ~~Flo~~ws ~~Nine~~Flows - Three months ended ~~December 31, 2017~~June 30, 2023 and ~~2016~~ 2022	4 6

	Notes to Condensed Consolidated Financial Statements -June 30, 2023 ~~December 31, 2017~~		5 7

Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations	34 22

Item 3.		Quantitative and Qualitative Disclosures About Market Risk	54 32

Item 4.		Controls and Procedures	54 32

Part II. Other Information		33
Item 1.	Legal Proceedings		33
Item 1.1A.	Risk Factors	~~Legal Proceedings~~	55 33

~~Item 1A.~~		~~Risk Factors~~	55

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	55 33

Item 3.		~~Default~~Defaults Upon Senior Securities	55 33

Item 4.		Mine Safety Disclosures	55 33
Item 5.	Other Information		33
Item 5.6.	Exhibits	~~Other Information~~	55 33
Signatures
~~Item 6.~~		~~Exhibits~~	56

~~Signatures~~			57 34



	December 31, 2017			March 31, 2017
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	64,388		$	69,633
Trade and other receivables, less allowance for doubtful accounts of $4,028 and $4,559	320,999			311,792
Inventories, net of unliquidated progress payments of $409,040 and $222,485	1,462,724			1,340,175
Prepaid and other current assets	43,500			30,064
Assets held for sale	—			21,255
Total current assets	1,891,611			1,772,919
Property and equipment, net	749,922			805,030
Goodwill	934,500			1,142,605
Intangible assets, net	520,820			592,364
Other, net	89,079			101,682
Total assets	$	4,185,932		$	4,414,600
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	15,135		$	160,630
Accounts payable	387,081			481,243
Accrued expenses	627,411			674,379
Liabilities related to assets held for sale	—			18,008
Total current liabilities	1,029,627			1,334,260
Long-term debt, less current portion	1,359,476			1,035,670
Accrued pension and other postretirement benefits	509,641			592,134
Deferred income taxes	41,969			68,107
Other noncurrent liabilities	496,705			537,956
Stockholders’ equity:
Common stock, $.001 par value, 100,000,000 shares authorized, 52,460,920 and 52,460,920 shares issued; 49,662,507 and 49,573,029 shares outstanding	51			51
Capital in excess of par value	849,806			846,807
Treasury stock, at cost, 2,798,413 and 2,887,891 shares	(179,692		)	(183,696		)
Accumulated other comprehensive loss	(374,624		)	(396,178		)
Retained earnings	452,973			579,489
Total stockholders’ equity	748,514			846,473
Total liabilities and stockholders’ equity	$	4,185,932		$	4,414,600



	Three Months Ended December 31,					Nine Months Ended December 31,
	2017			2016		2017			2016

Net sales	$	775,246		$	844,863	$	2,302,091		$	2,612,885
Operating costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown separately below)	612,206			653,199		1,821,513			2,052,900
Selling, general and administrative	62,147			66,750		213,934			205,222
Depreciation and amortization	39,320			44,331		119,318			135,080
Impairment of intangible assets	190,227			—		190,227			—
Restructuring costs	6,149			11,067		33,751			28,180
Loss on divestitures	—			14,350		20,371			19,124
Curtailment and settlement gain, net	(15,099		)	—		(14,576		)	—
	894,950			789,697		2,384,538			2,440,506
Operating (loss) income	(119,704		)	55,166		(82,447		)	172,379
Interest expense and other	25,836			19,698		72,229			55,721
(Loss) income before income taxes	(145,540		)	35,468		(154,676		)	116,658
Income tax (benefit) expense	(32,288		)	6,136		(34,115		)	32,786
Net (loss) income	$	(113,252	)	$	29,332	$	(120,561	)	$	83,872

(Loss) earnings per share—basic:	$	(2.29	)	$	0.59	$	(2.44	)	$	1.70

Weighted-average common shares outstanding—basic	49,459			49,329		49,425			49,294

(Loss) earnings per share—diluted:	$	(2.29	)	$	0.59	$	(2.44	)	$	1.70

Weighted-average common shares outstanding—diluted	49,459			49,440		49,425			49,421

Dividends declared and paid per common share	$	0.04		$	0.04	$	0.12		$	0.12



	March 31, 2017
	Weighted- Average Life	Gross Carrying Amount		Accumulated Amortization			Net

Customer relationships	16.6	$	663,165	$	(241,124	)	$	422,041
Product rights, technology and licenses	11.4	54,347		(39,486		)	14,861
Non-compete agreements and other	16.3	2,756		(786		)	1,970
Tradenames	10.3	163,000		(9,508		)	153,492
Total intangibles, net		$	883,268	$	(290,904	)	$	592,364


	Total		Less than 1 year		1-3 years		4-5 years		More than 5 years
Unsatisfied performance obligations	$	1,465,111	$	865,932	$	559,346	$	37,938	$	1,895



	December 31, 2017
	Inventory		Capitalized Pre-Production		Forward Loss Provision			Total Inventory, net
Bombardier	$	265,137	$	670,010	$	(352,900	)	$	582,247
Embraer	33,669		179,121		(5,762		)	207,028
Total	$	298,806	$	849,131	$	(358,662	)	$	789,275

	March 31, 2017
	Inventory		Capitalized Pre-Production		Forward Loss Provision			Total Inventory, net
Bombardier	$	89,650	$	589,449	$	(399,758	)	$	279,341
Embraer	14,987		173,169		(5,800		)	182,356
Total	$	104,637	$	762,618	$	(405,558	)	$	461,697



	December 31, 2017			March 31, 2017

Revolving line of credit	$	50,000		$	29,999
Term loan	—			309,375
Receivable securitization facility	109,200			112,900
Capital leases	58,297			72,800
Senior notes due 2021	375,000			375,000
Senior notes due 2022	300,000			300,000
Senior notes due 2025	500,000			—
Other debt	—			7,978
Less: Debt issuance costs	(17,886		)	(11,752		)
	1,374,611			1,196,300
Less: Current portion	15,135			160,630
	$	1,359,476		$	1,035,670


June 30, 2023				March 31, 2023
Carrying Value		Fair Value		Carrying Value		Fair Value
$	1,677,702	$	1,711,070	$	1,691,782	$	1,676,879



	Integrated Systems			Precision Components			Product Support			Total
Balance, March 31, 2017	$	541,155		$	532,418		$	69,032		$	1,142,605
Impairment of goodwill	—			(190,227		)	—			(190,227		)
Goodwill derecognized in connection with divestitures and assets held for sale	(27,709		)	—			—			(27,709		)
Effect of exchange rate changes	7,126			2,810			(105		)	9,831
Balance, December 31, 2017	$	520,572		$	345,001		$	68,927		$	934,500


	Pension Benefits
	Three Months Ended June 30,
	2023			2022
Components of net periodic benefit income:
Service cost	$	100		$	179
Interest cost		20,117			16,278
Expected return on plan assets		(26,252	)		(30,324	)
Amortization of prior service credits		26			26
Amortization of net loss		7,523			7,719
Net periodic benefit expense (income)	$	1,514		$	(6,122	)



	Other postretirement benefits
	Three Months Ended December 31,						Nine Months Ended December 31,
	2017			2016			2017			2016
Components of net periodic benefit costs:
Service cost	$	102		$	179		$	305		$	537
Interest cost	1,219			1,247			3,656			3,740
Amortization of prior service credits	(2,328		)	(3,366		)	(6,984		)	(10,097		)
Amortization of gain	(1,775		)	(1,647		)	(5,324		)	(4,941		)
Settlement gain	(15,099		)	—			(15,099		)	—
Net periodic benefit income	$	(17,881	)	$	(3,587	)	$	(23,446	)	$	(10,761	)


	Currency Translation Adjustment			Unrealized Gains and Losses on Derivative Instruments			Defined Benefit Pension Plans and Other Postretirement Benefits				Total (1)
March 31, 2023	$	(49,206	)	$	1,217		$	(506,657	)		$	(554,646	)
Other comprehensive (loss) income before reclassifications		3,704			(1,254	)		—				2,450
Amounts reclassified from AOCI		—			917			5,173		(2)		6,090
Net current period OCI		3,704			(337	)		5,173				8,540
June 30, 2023	$	(45,502	)	$	880		$	(501,484	)		$	(546,106	)

March 31, 2022	$	(47,933	)	$	(270	)	$	(415,151	)		$	(463,354	)
Other comprehensive income before reclassifications		(10,382	)		(470	)		—				(10,852	)
Amounts reclassified from AOCI		—			(368	)		5,323		(2)		4,955
Net current period OCI		(10,382	)		(838	)		5,323				(5,897	)
June 30, 2022	$	(58,315	)	$	(1,108	)	$	(409,828	)		$	(469,251	)



	Currency Translation Adjustment			Unrealized Gains and Losses on Derivative Instruments			Defined Benefit Pension Plans and Other Postretirement Benefits					Total (1)
Balance September 30, 2017	$	(65,886	)	$	(246	)	$	(313,290	)			$	(379,422	)
AOCI before reclassifications	(1,824		)	(816		)	23,378					20,738
Amounts reclassified from AOCI	—			203			(16,143		)	(2	)	(15,940		)
Net current period AOCI	(1,824		)	(613		)	7,235					4,798
Balance December 31, 2017	$	(67,710	)	$	(859	)	$	(306,055	)			$	(374,624	)



Balance September 30, 2016	$	(80,434	)	$	(2,557	)	$	(288,572	)			$	(371,563	)
AOCI before reclassifications	(15,066		)	1,726			��					(13,340		)
Amounts reclassified from AOCI	—			5			(1,573		)	(2	)	(1,568		)
Net current period AOCI	(15,066		)	1,731			(1,573		)			(14,908		)
Balance December 31, 2016	$	(95,500	)	$	(826	)	$	(290,145	)			$	(386,471	)



Balance March 31, 2017	$	(87,212	)	$	2,153		$	(311,119	)			$	(396,178	)
AOCI before reclassifications	19,502			(835		)	23,901					42,568
Amounts reclassified from AOCI	—			(2,177		)	(18,837		)	(2	)	(21,014		)
Net current period AOCI	19,502			(3,012		)	5,064					21,554
Balance December 31, 2017	$	(67,710	)	$	(859	)	$	(306,055	)			$	(374,624	)



Balance March 31, 2016	$	(58,816	)	$	(2,920	)	$	(285,426	)			$	(347,162	)
AOCI before reclassifications	(36,684		)	2,100			—					(34,584		)
Amounts reclassified from AOCI	—			(6		)	(4,719		)	(2	)	(4,725		)
Net current period AOCI	(36,684		)	2,094			(4,719		)			(39,309		)
Balance December 31, 2016	$	(95,500	)	$	(826	)	$	(290,145	)			$	(386,471	)



	December 31, 2017		March 31, 2017
Total Assets:
Integrated Systems	$	1,220,259	$	1,281,828
Aerospace Structures	1,573,942		1,548,239
Precision Components	1,056,015		1,262,691
Product Support	285,302		284,231
Corporate	50,414		37,611
	$	4,185,932	$	4,414,600



	December 31, 2017
	Parent		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated Total
Current assets:
Cash and cash equivalents	$	12,628	$	8,396		$	43,364	$	—		$	64,388
Trade and other receivables, net	—		69,305			251,694		—			320,999
Inventories	—		1,342,611			120,113		—			1,462,724
Prepaid expenses and other	20,027		10,469			13,004		—			43,500
Total current assets	32,655		1,430,781			428,175		—			1,891,611
Property and equipment, net	10,920		618,925			120,077		—			749,922
Goodwill and other intangible assets, net	—		1,321,175			134,145		—			1,455,320
Other, net	21,496		45,329			22,254		—			89,079
Intercompany investments and advances	2,354,461		81,541			72,512		(2,508,514		)	—
Total assets	$	2,419,532	$	3,497,751		$	777,163	$	(2,508,514	)	$	4,185,932

Current liabilities:
Current portion of long-term debt	$	574	$	14,561		$	—	$	—		$	15,135
Accounts payable	3,324		340,106			43,651		—			387,081
Accrued expenses	49,520		531,133			46,758		—			627,411
Total current liabilities	53,418		885,800			90,409		—			1,029,627
Long-term debt, less current portion	1,317,662		41,814			—		—			1,359,476
Intercompany advances	283,926		2,080,159			488,955		(2,853,040		)	—
Accrued pension and other postretirement benefits, noncurrent	6,608		503,033			—		—			509,641
Deferred income taxes and other	9,404		495,634			33,636		—			538,674
Total stockholders’ equity	748,514		(508,689		)	164,163		344,526			748,514
Total liabilities and stockholders’ equity	$	2,419,532	$	3,497,751		$	777,163	$	(2,508,514	)	$	4,185,932



Type of expense:	Total estimated amount expected to be incurred
Termination benefits	$	21,000
Facility closure and other exit costs (1)	44,000
Contract termination costs	18,000
Accelerated depreciation charges (2)	37,000
Other (3)	89,000
	$	209,000



	Three Months Ended December 31, 2017
	Total			Integrated Systems			Aerospace Structures			Precision Components			Product Support		Corporate/ Eliminations
Operating income (loss)	$	(119,704	)	$	42,667		$	12,022		$	(186,225	)	$	12,399	$	(567	)
Loss on divestitures	—			—			—			—			—		—
Curtailment & settlement gain, net	(15,099		)	—			—			—			—		(15,099		)
Amortization of acquired contract liabilities, net	(34,492		)	(11,634		)	(21,352		)	(1,506		)	—		—
Depreciation and amortization *	229,547			8,318			19,048			200,077			1,663		441
Adjusted EBITDA	$	60,252		$	39,351		$	9,718		$	12,346		$	14,062	$	(15,225	)
* - Includes Impairment charges related to intangible assets



	Three Months Ended December 31, 2016
	Total			Integrated Systems			Aerospace Structures			Precision Components			Product Support		Corporate/ Eliminations
Operating income (loss)	$	55,166		$	51,596		$	23,867		$	2,942		$	14,662	$	(37,901	)
Loss on divestitures	14,350			—			—			—			—		14,350
Amortization of acquired contract liabilities, net	(29,206		)	(7,628		)	(21,105		)	(473		)	—		—
Depreciation and amortization	44,331			9,766			17,942			13,999			2,294		330
Adjusted EBITDA	$	84,641		$	53,734		$	20,704		$	16,468		$	16,956	$	(23,221	)



	Nine Months Ended December 31, 2017
	Total			Integrated Systems			Aerospace Structures			Precision Components			Product Support		Corporate/ Eliminations
Operating income (loss)	$	(82,447	)	$	132,171		$	23,253		$	(191,100	)	$	32,069	$	(78,840	)
Loss on divestitures	20,371			—			—			—			—		20,371
Curtailment & settlement gain, net	(14,576		)	—			—			—			—		(14,576		)
Amortization of acquired contract liabilities, net	(91,862		)	(28,235		)	(60,315		)	(3,312		)	—		—
Depreciation and amortization *	309,545			27,857			57,484			218,085			5,068		1,051
Adjusted EBITDA	141,031			$	131,793		$	20,422		$	23,673		$	37,137	$	(71,994	)
* - Includes Impairment charges related to intangible assets



	Nine Months Ended December 31, 2016
	Total			Integrated Systems			Aerospace Structures			Precision Components			Product Support		Corporate/ Eliminations
Operating income (loss)	$	172,379		145,379			$	57,898		$	7,223		$	42,986	$	(81,107	)
Loss on divestitures	19,124			—			—			—			—		19,124
Amortization of acquired contract liabilities, net	(89,031		)	(27,101		)	(60,190		)	(1,740		)	—		—
Depreciation and amortization	135,080			30,228			54,289			42,344			7,230		989
Adjusted EBITDA	$	237,552		$	148,506		$	51,997		$	47,827		$	50,216	$	(60,994	)



	Three Months Ended December 31,								% of Total Sales
	2017			2016			% Change		2017		2016
	(in thousands)
NET SALES
Integrated Systems	$	239,198		$	256,080		(6.6	)%	30.9	%	30.3	%
Aerospace Structures	282,495			304,235			(7.1	)%	36.4	%	36.0	%
Precision Components	219,675			226,294			(2.9	)%	28.3	%	26.8	%
Product Support	68,039			87,292			(22.1	)%	8.8	%	10.3	%
Elimination of inter-segment sales	(34,161		)	(29,038		)	17.6	%	(4.4	)%	(3.4	)%
Total Net Sales	$	775,246		$	844,863		(8.2	)%	100.0	%	100.0	%



	Three Months Ended December 31,								% of Segment Sales
	2017			2016			% Change		2017		2016
	(in thousands)
SEGMENT OPERATING INCOME
Integrated Systems	$	42,667		$	51,596		(17.3	)%	17.8	%	20.1	%
Aerospace Structures	12,022			23,867			(49.6	)%	4.3	%	7.8	%
Precision Components	(186,225		)	2,942			(6,429.9	)%	(84.8	)%	1.3	%
Product Support	12,399			14,662			(15.4	)%	18.2	%	16.8	%
Corporate	(567		)	(37,901		)	98.5	%	n/a		n/a
Total Operating Income	$	(119,704	)	$	55,166		(317.0	)%	(15.4	)%	6.5	%



	Payments Due by Period (in thousands)
Contractual Obligations	Total		Less than 1 year		1-3 years		4-5 years		More than 5 years
Debt principal (1)	$	1,392,497	$	15,135	$	135,072	$	733,777	$	508,513
Debt interest (2)	305,749		75,201		79,711		78,100		72,737
Operating leases	138,051		26,155		41,417		25,933		44,546
Purchase obligations	1,533,563		1,197,322		275,163		46,720		14,358
Total	$	3,369,860	$	1,313,813	$	531,363	$	884,530	$	640,154