Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Overview
On March 1, 2024, Triumph Group, Inc. ("Triumph" or the “Company”) completed its previously announced sale of its maintenance, repair, and overhaul operations located in Wellington, Kansas; Grand Prairie, Texas; San Antonio, Texas; Hot Springs, Arkansas; and Chonburi, Thailand (“Product Support” or "TPS") to AAR CORP. (“AAR”) (the "TPS Divestiture"), pursuant to a securities and asset purchase agreement entered into on December 21, 2023, (as amended or supplemented through the date hereof) (the “Divestiture Agreement”), for a purchase price of $725 million in cash, subject to transaction adjustments in accordance with the Divestiture Agreement. For purposes of the unaudited pro forma condensed balance sheet, the cash proceeds received by the Company at closing, which are net of estimated closing adjustments and transaction cost funding, have been reflected as approximately $701 million. The divestiture of Product Support represents a strategic shift and therefore, beginning with the Company's quarterly report on Form-10-Q for the period ended December 31, 2023, Product Support was reflected as discontinued operations, including prior periods.
On February 6, 2024, Triumph issued (i) a notice of conditional redemption in respect of up to all $435.6 million of its outstanding 7.750% Senior Notes due 2025 (the “2025 Notes”) to be redeemed on March 6, 2024 (the "2025 Notes Redemption) and (ii) a notice of conditional redemption in respect of $120.0 million of its 9.000% Senior Secured First Lien Notes due 2028 (the “First Lien Notes”) to be redeemed on March 4, 2024 (the "First Lien Notes Redemption") (together, the "Senior Notes Redemptions"). The Senior Notes Redemptions were conditioned upon the consummation of the TPS Divestiture and therefore, on March 1, 2024, the Company concluded that the redemptions described on its February 6, 2024, Form 8-K were probable and the disclosure of related pro forma financial information would be material to investors.
Unaudited Pro Forma Financial Information
The following unaudited pro forma consolidated financial statements of Triumph were derived from its historical consolidated financial statements and are being presented to give effect to the TPS Divestiture and the Senior Notes Redemptions (together, the "Transactions"). The unaudited pro forma condensed consolidated balance sheet as of December 31, 2023, gives effect to the Transactions as if they had occurred on that date. As the TPS Divestiture was reflected as a component of discontinued operations within the condensed consolidated statement of operations in Triumph's Quarterly Report on Form 10-Q for December 31, 2023, the unaudited pro forma consolidated statements of operations for the nine months ended December 31, 2023, only reflects pro forma transaction adjustments for the Senior Notes Redemptions.
The unaudited pro forma consolidated statements of operations for the years ended March 31, 2023, 2022 and 2021 give effect to the pro forma discontinued operations presentation of the TPS Divestiture as if the TPS Divestiture had occurred on April 1, 2020, and in accordance with Financial Accounting Standards Board Accounting Standards Codification 205, “Presentation of Financial Statements” (“ASC 205”) for those historical periods.
The unaudited pro forma consolidated statements of operations for the year ended March 31, 2023, give effect to the pro forma Senior Notes Redemptions as if they had occurred on April 1, 2022, after adjusting for the effects of the TPS Divestiture as disclosed further in Note 2 below.
The unaudited pro forma consolidated financial statements should be read in conjunction with: (i) the accompanying notes to the unaudited pro forma condensed consolidated financial statements, (ii) Triumph's audited consolidated financial statements, the accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Annual Report on Form 10-K for the year ended March 31, 2023; and (iii) Triumph's unaudited condensed consolidated financial statements, the accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2023.
The unaudited pro forma consolidated financial statements, prepared in accordance with Securities and Exchange Commission (“SEC”) Regulation S-X Article 11, Pro Forma Financial Information, have been prepared based upon the best available information and management estimates and are subject to assumptions and adjustments described in the accompanying notes to these financial statements, are for informational purposes only, and are not intended to be a complete presentation of the Company's operating results or financial position had the TPS Divestiture occurred as of and for the periods indicated, nor do they purport to project the results of operations or financial position for any future period or as of any future date. Accordingly, such information should not be relied upon as an indicator of future performance, financial condition or liquidity.
TRIUMPH GROUP, INC.
Unaudited Pro Forma Condensed Consolidated Balance Sheets
as of December 31, 2023
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(in thousands) |
| As Reported |
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| TPS Divestiture |
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| Senior Notes Redemptions |
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| Total Pro Forma |
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ASSETS |
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| Note 1 |
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| Note 2 |
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Current assets: |
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Cash and cash equivalents |
| $ | 162,899 |
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| $ | 701,214 |
| (a) |
| $ | (575,202 | ) | (c) |
| $ | 288,911 |
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Trade and other receivables, net |
|
| 127,494 |
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|
| — |
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|
|
| — |
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| 127,494 |
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Contract assets |
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| 89,406 |
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|
| — |
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|
| — |
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| 89,406 |
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Inventory, net |
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| 352,188 |
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| — |
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| — |
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| 352,188 |
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Prepaid expenses and other current assets |
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| 16,578 |
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| — |
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|
| — |
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| 16,578 |
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Assets held for sale - current |
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| 180,642 |
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| (180,642 | ) | (a) |
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| — |
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| — |
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Total current assets |
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| 929,207 |
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| 520,572 |
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| (575,202 | ) |
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| 874,577 |
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Property and equipment, net |
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| 141,583 |
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| — |
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| — |
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| 141,583 |
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Goodwill |
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| 511,571 |
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| — |
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| — |
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| 511,571 |
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Intangible assets, net |
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| 67,308 |
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| — |
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| — |
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| 67,308 |
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Other, net |
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| 26,913 |
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| — |
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| — |
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| 26,913 |
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Total assets |
| $ | 1,676,582 |
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| $ | 520,572 |
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| $ | (575,202 | ) |
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| $ | 1,621,952 |
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LIABILITIES AND STOCKHOLDERS' DEFICIT |
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Current liabilities: |
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Current portion of long-term debt |
| $ | 3,342 |
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| $ | (141 | ) | (b) |
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| — |
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| 3,201 |
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Accounts payable |
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| 133,550 |
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| — |
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| — |
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| 133,550 |
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Contract liabilities |
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| 40,182 |
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| — |
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| — |
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| 40,182 |
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Accrued expenses |
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| 140,092 |
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| (6,835 | ) | (b) |
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| (15,981 | ) | (c) |
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| 117,276 |
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Liabilities related to assets held for sale - current |
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| 32,216 |
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| (32,216 | ) | (a) |
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| — |
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| — |
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Total current liabilities |
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| 349,382 |
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| (39,192 | ) |
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| (15,981 | ) |
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| 294,209 |
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Long-term debt, less current portion |
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| 1,627,810 |
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| (193 | ) | (b) |
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| (555,621 | ) | (c) |
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| 1,071,996 |
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Accrued pension and other postretirement benefits |
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| 301,661 |
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| — |
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| — |
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| 301,661 |
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Deferred income taxes |
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| 7,356 |
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| — |
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| — |
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| 7,356 |
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Other noncurrent liabilities |
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| 60,653 |
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| — |
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| — |
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| 60,653 |
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Stockholders' deficit: |
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Common stock |
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| 77 |
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| — |
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| — |
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| 77 |
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Capital in excess of par value |
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| 1,107,241 |
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| — |
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| — |
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| 1,107,241 |
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Treasury stock, at cost |
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| (5 | ) |
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| — |
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| — |
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| (5 | ) |
Accumulated other comprehensive loss |
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| (534,676 | ) |
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| — |
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| — |
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| (534,676 | ) |
Accumulated deficit |
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| (1,242,917 | ) |
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| 559,957 |
| (a) |
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| (3,600 | ) | (c) |
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| (686,560 | ) |
Total stockholders' deficit |
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| (670,280 | ) |
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| 559,957 |
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| (3,600 | ) |
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| (113,923 | ) |
Total liabilities and stockholders' deficit |
| $ | 1,676,582 |
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| $ | 520,572 |
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| $ | (575,202 | ) |
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| $ | 1,621,952 |
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TRIUMPH GROUP, INC.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the Nine Months Ended December 31, 2023
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(in thousands, except per share amounts) | As Reported |
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| Senior Notes Redemptions |
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| Total |
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Net sales | $ | 833,456 |
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| $ | — |
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| $ | 833,456 |
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Operating costs and expenses: |
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Cost of sales (exclusive of depreciation shown separately below) |
| 618,742 |
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| — |
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| 618,742 |
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Selling, general and administrative |
| 135,479 |
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| — |
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| 135,479 |
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Depreciation and amortization |
| 22,062 |
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| — |
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| 22,062 |
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Legal judgment loss |
| 1,338 |
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| — |
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| 1,338 |
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Restructuring |
| 1,985 |
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| — |
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| 1,985 |
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Loss on sale of assets and businesses |
| 12,208 |
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| — |
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| 12,208 |
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| 791,814 |
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| — |
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| 791,814 |
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Operating income |
| 41,642 |
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| — |
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| 41,642 |
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Non-service defined benefit income |
| (2,460 | ) |
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| — |
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| (2,460 | ) |
Debt modification and extinguishment (gain) loss |
| (5,125 | ) |
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| 9,691 |
| (d) |
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| 4,566 |
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Warrant remeasurement gain, net |
| (8,545 | ) |
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| — |
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| (8,545 | ) |
Interest expense and other, net |
| 94,354 |
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| (15,488 | ) | (d) |
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| 78,866 |
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Loss from continuing operations before income taxes |
| (36,582 | ) |
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| 5,797 |
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| (30,785 | ) |
Income tax expense |
| 3,348 |
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| — |
| (g) |
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| 3,348 |
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Net loss | $ | (39,930 | ) |
| $ | 5,797 |
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| $ | (34,133 | ) |
Loss per share - continuing operations—basic | $ | (0.55 | ) |
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| $ | (0.47 | ) | |
Weighted average common shares outstanding—basic |
| 73,200 |
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| 73,200 |
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Loss per share - continuing operations—diluted | $ | (0.55 | ) |
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| $ | (0.47 | ) | |
Weighted average common shares outstanding—diluted |
| 73,200 |
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| 73,200 |
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TRIUMPH GROUP, INC.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the Year Ended March 31, 2023
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(in thousands, except per share amounts) | As Reported |
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| (a) |
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| Senior Notes Redemptions |
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| Total |
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| Note 1 |
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| Note 2 |
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Net sales | $ | 1,379,128 |
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| $ | (248,566 | ) |
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| — |
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| $ | 1,130,562 |
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Operating costs and expenses: |
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Cost of sales (exclusive of depreciation shown separately below) |
| 991,599 |
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| (181,717 | ) |
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| — |
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| 809,882 |
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Selling, general and administrative |
| 210,430 |
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| (19,342 | ) |
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| — |
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| 191,088 |
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Depreciation and amortization |
| 35,581 |
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| (3,322 | ) |
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| — |
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| 32,259 |
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Restructuring |
| 4,949 |
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| (1,777 | ) |
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| — |
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| 3,172 |
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Gain on sale of assets and businesses |
| (101,523 | ) |
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| — |
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| — |
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| (101,523 | ) |
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| 1,141,036 |
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| (206,158 | ) |
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| — |
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| 934,878 |
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Operating income |
| 238,092 |
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| (42,408 | ) |
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| — |
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| 195,684 |
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Non-service defined benefit income |
| (19,664 | ) |
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| — |
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| — |
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| (19,664 | ) |
Debt modification and extinguishment loss |
| 33,044 |
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| — |
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| 7,337 |
| (e) |
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| 40,381 |
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Warrant remeasurement gain, net |
| (8,683 | ) |
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| — |
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|
| — |
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|
|
| (8,683 | ) |
Interest expense and other, net |
| 137,714 |
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| (22,504 | ) |
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| (23,059 | ) | (e) |
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| 92,151 |
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Income from continuing operations before income taxes |
| 95,681 |
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| (19,904 | ) |
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| 15,722 |
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| 91,499 |
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Income tax expense |
| 6,088 |
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| (2,442 | ) |
|
| — |
| (g) |
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| 3,646 |
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Net income | $ | 89,593 |
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| $ | (17,462 | ) |
| $ | 15,722 |
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| $ | 87,853 |
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Earnings per share - continuing operations—basic | $ | 1.38 |
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| $ | 1.35 |
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Weighted average common shares outstanding—basic |
| 65,021 |
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| 65,021 |
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Earnings per share - continuing operations—diluted | $ | 1.20 |
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| (f) | $ | 1.17 |
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Weighted average common shares outstanding—diluted |
| 71,721 |
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| 71,721 |
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TRIUMPH GROUP, INC.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the Year Ended March 31, 2022
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(in thousands, except per share amounts) | As Reported |
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| (a) |
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| Total |
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Net sales | $ | 1,459,942 |
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| $ | (197,238 | ) |
| $ | 1,262,704 |
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Operating costs and expenses: |
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|
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|
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Cost of sales (exclusive of depreciation shown separately below) |
| 1,073,063 |
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|
| (144,426 | ) |
|
| 928,637 |
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Selling, general and administrative |
| 202,070 |
|
|
| (17,815 | ) |
|
| 184,255 |
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Depreciation and amortization |
| 49,635 |
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|
| (4,126 | ) |
|
| 45,509 |
|
Impairment of long-lived assets |
| 2,308 |
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|
| — |
|
|
| 2,308 |
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Restructuring |
| 19,295 |
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|
| (74 | ) |
|
| 19,221 |
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Loss on sale of assets and businesses |
| 9,294 |
|
|
| — |
|
|
| 9,294 |
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|
| 1,355,665 |
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|
| (166,441 | ) |
|
| 1,189,224 |
|
Operating income |
| 104,277 |
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|
| (30,797 | ) |
|
| 73,480 |
|
Non-service defined benefit income |
| (5,373 | ) |
|
| — |
|
|
| (5,373 | ) |
Debt modification and extinguishment loss |
| 11,624 |
|
|
| — |
|
|
| 11,624 |
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Interest expense and other, net |
| 135,861 |
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|
| (22,781 | ) |
|
| 113,080 |
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Loss from continuing operations before income taxes |
| (37,835 | ) |
|
| (8,016 | ) |
|
| (45,851 | ) |
Income tax expense |
| 4,923 |
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|
| (110 | ) |
|
| 4,813 |
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Net loss | $ | (42,758 | ) |
| $ | (7,906 | ) |
| $ | (50,664 | ) |
Loss per share - continuing operations—basic | $ | (0.66 | ) |
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| $ | (0.79 | ) | |
Weighted average common shares outstanding—basic |
| 64,538 |
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|
|
|
|
| 64,538 |
| |
Loss per share - continuing operations—diluted | $ | (0.66 | ) |
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|
|
| $ | (0.79 | ) | |
Weighted average common shares outstanding—diluted |
| 64,538 |
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|
|
|
|
| 64,538 |
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TRIUMPH GROUP, INC.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the Year Ended March 31, 2021
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(in thousands, except per share amounts) | As Reported |
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| (a) |
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| Total |
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Net sales | $ | 1,869,719 |
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| $ | (171,278 | ) |
| $ | 1,698,441 |
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Operating costs and expenses: |
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|
|
|
|
|
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Cost of sales (exclusive of depreciation shown separately below) |
| 1,476,266 |
|
|
| (153,896 | ) |
|
| 1,322,370 |
|
Selling, general and administrative |
| 215,962 |
|
|
| (18,787 | ) |
|
| 197,175 |
|
Depreciation and amortization |
| 93,334 |
|
|
| (4,633 | ) |
|
| 88,701 |
|
Impairment of long-lived assets |
| 252,382 |
|
|
| — |
|
|
| 252,382 |
|
Restructuring |
| 53,224 |
|
|
| — |
|
|
| 53,224 |
|
Loss on sale of assets and businesses |
| 104,702 |
|
|
| — |
|
|
| 104,702 |
|
|
| 2,195,870 |
|
|
| (177,316 | ) |
|
| 2,018,554 |
|
Operating loss |
| (326,151 | ) |
|
| 6,038 |
|
|
| (320,113 | ) |
Non-service defined benefit income |
| (49,519 | ) |
|
| — |
|
|
| (49,519 | ) |
Interest expense and other, net |
| 171,397 |
|
|
| (26,226 | ) |
|
| 145,171 |
|
Loss from continuing operations before income taxes |
| (448,029 | ) |
|
| 32,264 |
|
|
| (415,765 | ) |
Income tax expense |
| 2,881 |
|
|
| 108 |
|
|
| 2,989 |
|
Net loss | $ | (450,910 | ) |
| $ | 32,156 |
|
| $ | (418,754 | ) |
Loss per share - continuing operations—basic | $ | (8.55 | ) |
|
|
|
| $ | (7.94 | ) | |
Weighted average common shares outstanding—basic |
| 52,739 |
|
|
|
|
|
| 52,739 |
| |
Loss per share - continuing operations—diluted | $ | (8.55 | ) |
|
|
|
| $ | (7.94 | ) | |
Weighted average common shares outstanding—diluted |
| 52,739 |
|
|
|
|
|
| 52,739 |
|
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following items resulted in adjustments in the unaudited pro forma condensed consolidated financial statements.
Transaction Accounting Adjustments:
Note 1
Note 2