NEWS RELEASE
Contact:
Sheila Spagnolo
Vice President
Phone (610) 251-1000
sspagnolo@triumphgroup.com
TRIUMPH GROUP REPORTS
STRONG THIRD QUARTER FISCAL 2012 RESULTS;
RAISES FISCAL YEAR 2012 GUIDANCE
| • | Net sales for third quarter fiscal year 2012 increased 2% to $826.0 million |
| • | Operating income for third quarter fiscal year 2012 increased 36% to $117.6 million, reflecting an operating margin of 14% |
| • | Income from continuing operations for third quarter fiscal year 2012 increased 47% to $67.2 million, or $1.29 per diluted share, excluding integration costs and computed on 52.0 million shares |
| • | Year to date cash flow from operations before pension contribution of $97.7 million was $241.2 million |
Berwyn, PA - January 30, 2012- Triumph Group, Inc. (NYSE: TGI) today reported that net sales for the third quarter of fiscal year ending March 31, 2012 totaled $826.0 million, a two percent increase from last year's third quarter net sales of $810.9 million. Organic sales growth for the quarter was two percent. Adjusting for declines in both non-recurring revenue and the 787 program, sales would have increased five percent.
Income from continuing operations for the third quarter of fiscal year 2012 increased forty-seven percent to $65.9 million, or $1.27 per diluted share, versus $45.0 million, or $0.88 per diluted share, for the third quarter of the prior year. The quarter's results included $2.1 million pre tax ($1.3 million after tax or $0.03 per diluted share) of integration costs related to the acquisition of Vought Aircraft Industries (now Triumph Aerostructures-Vought Aircraft Division), of which $1.4 million was primarily non-cash costs related to manufacturing moves. The prior fiscal year's quarter included $1.0 million pretax ($0.7 million after tax) of integration costs associated with the Vought acquisition. Excluding these costs, income from continuing operations for the third quarter of fiscal year 2012 was $67.2 million, or $1.29 per diluted share.
“Interest expense and other” for the third quarter of fiscal 2012 was favorably impacted by a $2.9 million adjustment due to the revaluation of a contingent earnout liability associated with a prior acquisition. The number of shares used in computing diluted earnings per share for the third quarter of fiscal year 2012 was 52.0 million shares.
Net sales for the first nine months of fiscal year 2012 were $2.462 billion, a twenty-four percent increase from net sales of $1.986 billion last fiscal year. Income from continuing operations for the first nine months of fiscal year 2012 increased seventy-eight percent to $175.4 million, or $3.39 per diluted share, versus $98.4 million, or $2.13 per diluted share, in the prior year period. The year to date results included $3.7 million pretax ($2.4 million after tax or $0.05 per diluted share) of integration expenses related to the Vought acquisition. The prior fiscal year's period included $19.7 million pretax ($14.5 million after tax) of transaction and integration expenses associated with the Vought acquisition. Excluding these costs, income from continuing operations for the first nine months of fiscal 2012 was $177.7 million, or $3.44 per diluted share.
During the nine months ended December 31, 2011, the company generated $241.2 million of cash flow from operations before Triumph Aerostructures' pension contribution of $97.7 million; after this contribution, cash flow from operations was $143.5 million.
Segments
Aerostructures
The Aerostructures segment reported net sales for the quarter of $626.0 million compared to $613.5 million in the prior year period, an increase of two percent, all of which was organic. Operating income for the third quarter of fiscal year 2012 increased forty-seven percent to $103.9 million versus $70.6 million for the prior year period and included a net favorable cumulative catch-up adjustment on long-term contracts of $8.4 million. As a result of improved execution, synergy realization and lower pension expense, the segment's operating margin for the quarter increased to seventeen percent, a 510 basis points improvement over the prior year period.
Aerospace Systems
The Aerospace Systems segment reported net sales for the quarter of $133.3 million compared to $124.7 million in the prior year period, an increase of seven percent, all of which was organic. Operating income for the third quarter of fiscal year 2012 was $18.6 million compared to $17.4 million for the prior year period, an increase of seven percent. Operating margin for the quarter was fourteen percent. The segment's operating results included $0.8 million of legal expenses associated with the ongoing trade secret litigation.
Aftermarket Services
The Aftermarket Services segment reported net sales for the quarter of $68.6 million compared to an all time quarter record of $74.7 million in the prior year period. The decrease of eight percent was driven primarily by a reduction in military sales. Operating income for the third quarter of fiscal year 2012 was $6.9 million compared to $9.5 million for the prior year period. Operating margin for the quarter was ten percent. The segment's operating results included $0.7 million of expense associated with the American Airlines bankruptcy.
Outlook
Commenting on the company's performance and its outlook for fiscal year 2012, Richard C. Ill, Triumph's Chairman and Chief Executive Officer, said, “We continued our strong performance during the third quarter delivering increased revenue, record operating income and substantially higher operating margins in our Aerostructures Group. We continued to execute well, contain costs, and generate very strong cash flow. We expect this momentum to carry on into our fourth quarter and are confident in our ability to
deliver long term organic growth and strong profitability.”
“Based on our strong performance year to date, current aircraft production rates, a weighted average share count of 52.0 million shares and revenue between $3.35 and $3.4 billion, we are raising our diluted per share earnings guidance from continuing operations for the full year to approximately $4.70 excluding integration costs.”
As previously announced, Triumph Group will hold a conference call tomorrow at 8:30 a.m. (ET) to discuss the fiscal year 2012 third quarter results. The conference call will be available live and archived on the company's website at http://www.triumphgroup.com. A slide presentation will be included with the audio portion of the webcast. An audio replay will be available from January 31st to February 7th by calling (888) 266-2081 (Domestic) or (703) 925-2533 (International), passcode #1564054.
Triumph Group, Inc., headquartered in Berwyn, Pennsylvania, 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 the aviation industry, including original equipment manufacturers of commercial, regional, business and military aircraft and aircraft components, as well as commercial and regional airlines and air cargo carriers.
More information about Triumph can be found on the company's website at http://www.triumphgroup.com.
Statements in this release which are not historical facts are forward-looking statements under the provisions of the Private Securities Litigation Reform Act of 1995, including statements of expectations of or assumptions about future aerospace market conditions, aircraft production rates, financial and operational performance, revenue and earnings growth, and earnings results for fiscal 2012. All forward-looking statements involve risks and uncertainties which could affect the company's actual results and could cause its actual results to differ materially from those expressed in any forward looking statements made by, or on behalf of, the company.
Further information regarding the important factors that could cause actual results to differ from projected results can be found in Triumph's reports filed with the SEC, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2011.
FINANCIAL DATA (UNAUDITED) ON FOLLOWING PAGES
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(in thousands, except per share data)
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| December 31, | December 31, | ||||||||||||||||
| CONDENSED STATEMENTS OF INCOME | 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Net sales | $ | 825,962 | $ | 810,853 | $ | 2,461,553 | $ | 1,986,262 | |||||||||
| Operating income | 117,640 | * | 86,659 | * * | 331,476 | * | 205,626 | ** | |||||||||
| Interest expense and other | 14,543 | 21,869 | 58,676 | 57,119 | |||||||||||||
| Income tax expense | 37,194 | 19,810 | 97,429 | 50,126 | |||||||||||||
| Income from continuing operations | 65,903 | 44,980 | 175,371 | 98,381 | |||||||||||||
| Loss from discontinued operations, net of tax | — | (336 | ) | (765 | ) | (825 | ) | ||||||||||
| Net income | $ | 65,903 | $ | 44,644 | $ | 174,606 | $ | 97,556 | |||||||||
| Earnings per share - basic: | |||||||||||||||||
| Income from continuing operations | $ | 1.35 | $ | 0.93 | $ | 3.60 | $ | 2.24 | |||||||||
| Loss from discontinued operations | — | (0.01 | ) | (0.02 | ) | (0.02 | ) | ||||||||||
| Net income | $ | 1.35 | $ | 0.93 | ^ | $ | 3.59 | ^ | $ | 2.22 | |||||||
| Weighted average common shares outstanding - basic | 48,912 | 48,155 | 48,692 | 43,956 | |||||||||||||
| Earnings per share - diluted: | |||||||||||||||||
| Income from continuing operations | $ | 1.27 | $ | 0.88 | $ | 3.39 | $ | 2.13 | |||||||||
| Loss from discontinued operations | — | (0.01 | ) | (0.01 | ) | (0.02 | ) | ||||||||||
| Net income | $ | 1.27 | $ | 0.88 | ^ | $ | 3.38 | $ | 2.11 | ||||||||
| Weighted average common shares outstanding - diluted | 51,968 | 50,950 | 51,689 | 46,213 | |||||||||||||
| Dividends declared and paid per common share | $ | 0.04 | $ | 0.02 | $ | 0.10 | $ | 0.06 | |||||||||
| ^ | Difference due to rounding. | |||
| * | Includes $2,095 and $3,699 of acquisition and integration expenses primarily associated with the acquisition of Vought, for the three and nine months ended December 31, 2011, respectively. | |||
| ** | Includes $1,000 and $19,650 of acquisition and integration expenses associated with the acquisition of Vought for the three and nine months ended December 31, 2010, respectively. | |||
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FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except per share data)
| BALANCE SHEET | Unaudited | Audited | ||||||
| December 31, | March 31, | |||||||
| 2011 | 2011 | |||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 32,682 | $ | 39,328 | ||||
| Accounts receivable, net | 345,627 | 374,491 | ||||||
| Inventory, net of unliquidated progress payments of $148,351 and $138,206 | 848,555 | 781,714 | ||||||
| Rotable assets | 33,024 | 26,607 | ||||||
| Prepaid and other current assets | 47,908 | 18,141 | ||||||
| Assets held for sale | — | 4,574 | ||||||
| Current assets | 1,307,796 | 1,244,855 | ||||||
| Property and equipment, net | 722,332 | 734,879 | ||||||
| Goodwill | 1,533,102 | 1,530,580 | ||||||
| Intangible assets, net | 837,641 | 859,620 | ||||||
| Other, net | 32,702 | 93,303 | ||||||
| Total assets | $ | 4,433,573 | $ | 4,463,237 | ||||
| Liabilities & Stockholders' Equity | ||||||||
| Current portion of long-term debt | $ | 141,535 | $ | 300,252 | ||||
| Accounts payable | 236,134 | 262,716 | ||||||
| Accrued expenses | 320,722 | 313,354 | ||||||
| Deferred income taxes | 49,871 | 78,793 | ||||||
| Liabilities related to assets held for sale | — | 431 | ||||||
| Current liabilities | 748,262 | 955,546 | ||||||
| Long-term debt, less current portion | 1,070,520 | 1,011,752 | ||||||
| Accrued pension and post-retirement benefits, noncurrent | 558,470 | 680,754 | ||||||
| Other noncurrent liabilities | 250,045 | 180,462 | ||||||
| Temporary equity | — | 2,506 | ||||||
| Stockholders' Equity: | ||||||||
| Common stock, $.001 par value, 100,000,000 shares authorized, 49,598,323 and 48,690,606 shares issued | 50 | 49 | ||||||
| Capital in excess of par value | 833,221 | 819,197 | ||||||
| Treasury stock, at cost, 137,911 and 177,184 shares | (4,044 | ) | (5,085 | ) | ||||
| Accumulated other comprehensive income | 110,360 | 120,471 | ||||||
| Retained earnings | 866,689 | 697,585 | ||||||
| Total stockholders' equity | 1,806,276 | 1,632,217 | ||||||
| Total liabilities and stockholders' equity | $ | 4,433,573 | $ | 4,463,237 | ||||
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FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
| SEGMENT DATA | Three Months Ended | Nine Months Ended | |||||||||||||||
| December 31, | December 31, | ||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||||||
| Net Sales: | |||||||||||||||||
| Aerostructures | $ | 626,045 | $ | 613,544 | $ | 1,857,328 | $ | 1,422,580 | |||||||||
| Aerospace Systems | 133,291 | 124,693 | 400,076 | 365,626 | |||||||||||||
| Aftermarket Services | 68,640 | 74,709 | 209,555 | 203,191 | |||||||||||||
| Elimination of inter-segment sales | (2,014 | ) | (2,093 | ) | (5,406 | ) | (5,135 | ) | |||||||||
| $ | 825,962 | $ | 810,853 | $ | 2,461,553 | $ | 1,986,262 | ||||||||||
| Operating Income (Loss): | |||||||||||||||||
| Aerostructures | $ | 103,947 | $ | 70,606 | $ | 284,410 | $ | 176,637 | |||||||||
| Aerospace Systems | 18,623 | 17,436 | 63,684 | 52,933 | |||||||||||||
| Aftermarket Services | 6,917 | 9,494 | 20,893 | 21,778 | |||||||||||||
| Corporate | (11,847 | ) | (10,877 | ) | (37,511 | ) | (45,722 | ) | |||||||||
| $ | 117,640 | * | $ | 86,659 | ** | $ | 331,476 | * | $ | 205,626 | ** | ||||||
| Depreciation and Amortization: | |||||||||||||||||
| Aerostructures | $ | 22,476 | $ | 18,071 | $ | 66,258 | $ | 44,889 | |||||||||
| Aerospace Systems | 4,296 | 4,336 | 12,963 | 12,738 | |||||||||||||
| Aftermarket Services | 2,431 | 2,400 | 7,202 | 8,486 | |||||||||||||
| Corporate | 928 | 845 | 2,641 | 1,416 | |||||||||||||
| $ | 30,131 | $ | 25,652 | $ | 89,064 | $ | 67,529 | ||||||||||
| Amortization of Acquired Contract Liabilities: | |||||||||||||||||
| Aerostructures | $ | (4,994 | ) | $ | (9,244 | ) | $ | (18,504 | ) | $ | (18,825 | ) | |||||
| Capital Expenditures: | |||||||||||||||||
| Aerostructures | $ | 16,794 | $ | 20,020 | $ | 38,519 | $ | 42,580 | |||||||||
| Aerospace Systems | 4,009 | 2,363 | 10,523 | 8,625 | |||||||||||||
| Aftermarket Services | 2,500 | 854 | 5,604 | 3,202 | |||||||||||||
| Corporate | 1,459 | 4,225 | 4,036 | 14,284 | |||||||||||||
| $ | 24,762 | $ | 27,462 | $ | 58,682 | $ | 68,691 | ||||||||||
| * | Includes $2,095 and $3,699 of acquisition and integration expenses primarily associated with the acquisition of Vought, for the three and nine months ended December 31, 2011, respectively. | |||
| ** | Includes $1,000 and $19,650 of acquisition and integration expenses associated with the acquisition of Vought for the three and nine months ended December 31, 2010, respectively. | |||
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FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures
We prepare and publicly release quarterly unaudited financial statements prepared in accordance with GAAP. In accordance with Securities and Exchange Commission (the "SEC") guidance on Compliance and Disclosure Interpretations, we also disclose and discuss certain non-GAAP financial measures in our public releases. Currently, the non-GAAP financial measure that we disclose is EBITDA, which is our income from continuing operations before interest, income taxes, amortization of acquired contract liabilities, depreciation and amortization. We disclose EBITDA on a consolidated and an operating segment basis in our earnings releases, investor conference calls and filings with the SEC. The non-GAAP financial measures that we use may not be comparable to similarly titled measures reported by other companies. Also, in the future, we may disclose different non-GAAP financial measures in order to help our investors more meaningfully evaluate and compare our future results of operations to our previously reported results of operations.
We view EBITDA as an operating performance measure and, as such, we believe that the GAAP financial measure most directly comparable to it is income from continuing operations. In calculating EBITDA, we exclude from income from continuing operations 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. EBITDA is not a measurement of financial performance under GAAP and should not be considered as a measure of liquidity, as an alternative to net income (loss), income from continuing operations, or as an indicator of any other measure of performance derived in accordance with GAAP. Investors and potential investors in our securities should not rely on EBITDA as a substitute for any 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 EBITDA to income from continuing operations set forth below, in our earnings releases and in other filings with the SEC and to carefully review the GAAP financial information included as part of our Quarterly Reports on Form 10-Q and our Annual Reports on Form 10-K that are filed with the SEC, as well as our quarterly earnings releases, and compare the GAAP financial information with our EBITDA.
EBITDA is used by management to internally measure our operating and management performance and by investors as a supplemental financial measure to evaluate the performance of our business that, when viewed with our GAAP results and the accompanying reconciliation, we believe provides additional information that is useful to gain an understanding of the factors and trends affecting our business. We have spent more than 15 years expanding our product and service capabilities partially through acquisitions of complementary businesses. Due to the expansion of our operations, which included acquisitions, our income from continuing operations has included significant charges for depreciation and amortization. EBITDA excludes these charges and provides meaningful information about the operating performance of our business, apart from charges for depreciation and amortization. We believe the disclosure of EBITDA helps investors meaningfully evaluate and compare our performance from quarter to quarter and from year to year. We also believe EBITDA is a measure of our ongoing operating performance because the isolation of non-cash income and expenses, such as amortization of acquired contract liabilities, depreciation and amortization, and non-operating items, such as interest and income taxes, provides additional information about our cost structure, and, over time, helps track our operating progress. In addition, investors, securities analysts and others have regularly relied on EBITDA to provide a financial measure by which to compare our operating performance against that of other companies in our industry.
Set forth below are descriptions of the financial items that have been excluded from our income from continuing operations to calculate EBITDA and the material limitations associated with using this non-GAAP financial measure as compared to income from continuing operations:
| • | Amortization of acquired contract liabilities may be useful for investors to consider because it represents the non-cash earnings on the fair value of below market contracts acquired through the acquisition of Vought. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations. |
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FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
| • | Amortization expenses may be useful for investors to consider because it represents the estimated attrition of our acquired customer base and the diminishing value of product rights and licenses. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure. |
| • | Depreciation may be useful for investors to consider because they generally represent the wear and tear on our property and equipment used in our operations. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure. |
| • | The amount of interest expense and other we incur may be useful for investors to consider and may result in current cash inflows or outflows. However, we do not consider the amount of interest expense and other to be a representative component of the day-to-day operating performance of our business. |
| • | Income tax expense may be useful for investors to consider because it generally represents the taxes which may be payable for the period and the change in deferred income taxes during the period and may reduce the amount of funds otherwise available for use in our business. However, we do not consider the amount of income tax expense to be a representative component of the day-to-day operating performance of our business. |
Management compensates for the above-described limitations of using non-GAAP measures by using a non-GAAP measure only to supplement our GAAP results and to provide additional information that is useful to gain an understanding of the factors and trends affecting our business.
The following table shows our EBITDA reconciled to our income from continuing operations for the indicated periods:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | ||||||||||||||||
| Income from continuing operations | $ | 65,903 | $ | 44,980 | $ | 175,371 | $ | 98,381 | ||||||||
| Add-back: | ||||||||||||||||
| Income tax expense | 37,194 | 19,810 | 97,429 | 50,126 | ||||||||||||
| Interest expense and other | 14,543 | 21,869 | 58,676 | 57,119 | ||||||||||||
| Amortization of acquired contract liabilities | (4,994 | ) | (9,244 | ) | (18,504 | ) | (18,825 | ) | ||||||||
| Depreciation and amortization | 30,131 | 25,652 | 89,064 | 67,529 | ||||||||||||
| Earnings before Interest, Taxes, Depreciation | ||||||||||||||||
| and Amortization ("EBITDA") | $ | 142,777 | $ | 103,067 | $ | 402,036 | $ | 254,330 | ||||||||
| Net sales | $ | 825,962 | $ | 810,853 | $ | 2,461,553 | $ | 1,986,262 | ||||||||
| EBITDA Margin | 17.3 | % | 12.7 | % | 16.3 | % | 12.8 | % | ||||||||
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FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
| Three Months Ended December 31, 2011 | |||||||||||||||||||||
| Segment Data | |||||||||||||||||||||
| Total | Aerostructures | Aerospace Systems | Aftermarket Services | Corporate/Eliminations | |||||||||||||||||
| Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | |||||||||||||||||||||
| Income from continuing operations | $ | 65,903 | |||||||||||||||||||
| Add-back: | |||||||||||||||||||||
| Income tax expense | 37,194 | ||||||||||||||||||||
| Interest expense and other | 14,543 | ||||||||||||||||||||
| Operating income (loss) | $ | 117,640 | $ | 103,947 | $ | 18,623 | $ | 6,917 | $ | (11,847 | ) | ||||||||||
| Amortization of acquired contract liabilities | (4,994 | ) | (4,994 | ) | — | — | — | ||||||||||||||
| Depreciation and amortization | 30,131 | 22,476 | 4,296 | 2,431 | 928 | ||||||||||||||||
| Earnings (Losses) before Interest, Taxes, Depreciation and Amortization (EBITDA): | $ | 142,777 | $ | 121,429 | $ | 22,919 | $ | 9,348 | $ | (10,919 | ) | * | |||||||||
| Net sales | $ | 825,962 | $ | 626,045 | $ | 133,291 | $ | 68,640 | $ | (2,014 | ) | ||||||||||
| EBITDA Margin | 17.3% | 19.4% | 17.2% | 13.6% | n/a | ||||||||||||||||
| Nine Months Ended December 31, 2011 | |||||||||||||||||||||
| Segment Data | |||||||||||||||||||||
| Total | Aerostructures | Aerospace Systems | Aftermarket Services | Corporate/Eliminations | |||||||||||||||||
| Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | |||||||||||||||||||||
| Income from continuing operations | $ | 175,371 | |||||||||||||||||||
| Add-back: | |||||||||||||||||||||
| Income tax expense | 97,429 | ||||||||||||||||||||
| Interest expense and other | 58,676 | ||||||||||||||||||||
| Operating income (loss) | $ | 331,476 | $ | 284,410 | $ | 63,684 | $ | 20,893 | $ | (37,511 | ) | ||||||||||
| Amortization of acquired contract liabilities | (18,504 | ) | (18,504 | ) | — | — | — | ||||||||||||||
| Depreciation and amortization | 89,064 | 66,258 | 12,963 | 7,202 | 2,641 | ||||||||||||||||
| Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("EBITDA") | $ | 402,036 | $ | 332,164 | $ | 76,647 | $ | 28,095 | $ | (34,870 | ) | ** | |||||||||
| Net sales | $ | 2,461,553 | $ | 1,857,328 | $ | 400,076 | $ | 209,555 | $ | (5,406 | ) | ||||||||||
| EBITDA Margin | 16.3% | 17.9% | 19.2% | 13.4% | n/a | ||||||||||||||||
| * | Includes $2,095 of acquisition and integration expenses primarily associated with the acquisition of Vought. | |||
| * * | Includes $3,699 of acquisition and integration expenses primarily associated with the acquisition of Vought. | |||
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FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
| Three Months Ended December 31, 2010 | |||||||||||||||||||||
| Segment Data | |||||||||||||||||||||
| Total | Aerostructures | Aerospace Systems | Aftermarket Services | Corporate/Eliminations | |||||||||||||||||
| Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | |||||||||||||||||||||
| Income from continuing operations | $ | 44,980 | |||||||||||||||||||
| Add-back: | |||||||||||||||||||||
| Income tax expense | 19,810 | ||||||||||||||||||||
| Interest expense and other | 21,869 | ||||||||||||||||||||
| Operating income (loss) | $ | 86,659 | $ | 70,606 | $ | 17,436 | $ | 9,494 | $ | (10,877 | ) | ||||||||||
| Amortization of acquired contract liabilities | (9,244 | ) | (9,244 | ) | — | — | — | ||||||||||||||
| Depreciation and amortization | 25,652 | 18,071 | 4,336 | 2,400 | 845 | ||||||||||||||||
| Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("EBITDA") | $ | 103,067 | $ | 79,433 | $ | 21,772 | $ | 11,894 | $ | (10,032 | ) | * | |||||||||
| Net sales | $ | 810,853 | $ | 613,544 | $ | 124,693 | $ | 74,709 | $ | (2,093 | ) | ||||||||||
| EBITDA Margin | 12.7% | 12.9% | 17.5% | 15.9% | n/a | ||||||||||||||||
| Nine Months Ended December 31, 2010 | |||||||||||||||||||||
| Segment Data | |||||||||||||||||||||
| Total | Aerostructures | Aerospace Systems | Aftermarket Services | Corporate / Eliminations | |||||||||||||||||
| Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | |||||||||||||||||||||
| Income from continuing operations | $ | 98,381 | |||||||||||||||||||
| Add-back: | |||||||||||||||||||||
| Income tax expense | 50,126 | ||||||||||||||||||||
| Interest expense and other | 57,119 | ||||||||||||||||||||
| Operating income (loss) | $ | 205,626 | $ | 176,637 | $ | 52,933 | $ | 21,778 | $ | (45,722 | ) | ||||||||||
| Amortization of acquired contract liabilities | (18,825 | ) | (18,825 | ) | — | — | — | ||||||||||||||
| Depreciation and amortization | 67,529 | 44,889 | 12,738 | 8,486 | 1,416 | ||||||||||||||||
| Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("EBITDA") | $ | 254,330 | $ | 202,701 | $ | 65,671 | $ | 30,264 | $ | (44,306 | ) | * * | |||||||||
| Net sales | $ | 1,986,262 | $ | 1,422,580 | $ | 365,626 | $ | 203,191 | $ | (5,135 | ) | ||||||||||
| EBITDA Margin | 12.8% | 14.2% | 18.0% | 14.9% | n/a | ||||||||||||||||
| * | Includes $1,000 of integration expenses associated with the acquisition of Vought. | |||
| * * | Includes $19,650 of acquisition and integration expenses associated with the acquisition of Vought. | |||
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Cash provided by operations, before pension contributions has been provided for consistency and comparability. We also use free cash flow available for debt reduction as a key factor in planning for and consideration of strategic acquisitions, stock repurchases and the repayment of debt. This measure should not be considered in isolation, as a measure of residual cash flow available for discretionary purposes, or as an alternative to operating results presented in accordance with GAAP. The following table reconciles cash provided by operations, before pension contributions to cash provided by operations, as well as cash provided by operations to free cash flow available for debt reduction.
| Nine Months Ended | ||||||||
| December 31, | ||||||||
| 2011 | 2010 | |||||||
| Cash provided by operations, before pension contributions | $ | 241,249 | $ | 189,602 | ||||
| Pension contributions | 97,730 | 74,856 | ||||||
| Cash provided by operations | 143,519 | 114,746 | ||||||
| Less: | ||||||||
| Capital expenditures | 58,682 | 68,691 | ||||||
| Dividends | 4,920 | 2,605 | ||||||
| Free cash flow available for debt reduction | $ | 79,917 | $ | 43,450 | ||||
We use "Net Debt to Capital" as a measure of financial leverage. The following table sets forth the computation of Net Debt to Capital:
| December 31, | March 31, | |||||||
| 2011 | 2011 | |||||||
| Calculation of Net Debt | ||||||||
| Current portion | $ | 141,535 | $ | 300,252 | ||||
| Long-term debt | 1,070,520 | 1,011,752 | ||||||
| Total debt | 1,212,055 | 1,312,004 | ||||||
| Less: Cash | 32,682 | 39,328 | ||||||
| Net debt | $ | 1,179,373 | $ | 1,272,676 | ||||
| Calculation of Capital | ||||||||
| Net debt | $ | 1,179,373 | $ | 1,272,676 | ||||
| Stockholders' equity | 1,806,276 | 1,632,217 | ||||||
| Total capital | $ | 2,985,649 | $ | 2,904,893 | ||||
| Percent of net debt to capital | 39.5 | % | 43.8 | % | ||||
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