Exhibit 99.1
NEWS RELEASE
Contact:
Sheila Spagnolo
Vice President
Phone (610) 251-1000
sspagnolo@triumphgroup.com
TRIUMPH GROUP REPORTS
THIRD QUARTER FISCAL 2014 EARNINGS
| • | Net sales for third quarter fiscal year 2014 increased 3% to $915.8 million |
| • | Operating income for third quarter fiscal year 2014 was $84.8 million, reflecting an operating margin of 9% |
| • | Net income for third quarter fiscal year 2014 was $35.4 million, or $0.67 per diluted share, which included $13.3 million pre-tax ($0.16 per diluted share) of costs related to the Jefferson Street facility move, $11.1 million pre-tax ($0.14 per diluted share) of refinancing fees and pension settlement charge of $1.6 million pre-tax ($0.02 per diluted share). Excluding these costs, earnings per share was $0.99 per diluted share |
| • | Year to date cash flow from operations before pension contribution of $45.8 million was $79.1 million |
Berwyn, PA - January 28, 2014 - Triumph Group, Inc. (NYSE: TGI) today reported that net sales for the third quarter of fiscal year ending March 31, 2014 totaled $915.8 million, a three percent increase from last year’s third quarter net sales of $890.6 million. Organic sales for the quarter decreased 6 percent primarily due to production rate cuts on the 747-8 and 767 programs, a decrease in military sales and customer deferrals.
Net income for the third quarter of fiscal year 2014 was $35.4 million, or $0.67 per diluted share, versus $75.2 million, or $1.43 per diluted share, for the third quarter of the prior year. The quarter’s results, reflected in Table A below, included $26.0 million pre-tax ($16.8 million after tax or $0.32 per diluted share) of non-recurring costs. The prior fiscal year’s quarter included approximately $0.3 million pre-tax ($0.2 million after tax) of integration costs associated with the acquisition of Vought Aircraft Industries (now Triumph Aerostructures-Vought Aircraft Division) and a charge of $2.0 million pre-tax ($1.3 million after tax) for early retirement incentives. Excluding the non-recurring costs, net income for the quarter was $52.2 million, or $0.99 per diluted share. The number of shares used in computing diluted earnings per share for the quarter was 52.8 million shares.
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The following table quantifies each of the non-recurring costs incurred in the third quarter of fiscal year 2014 as well as its impact on earnings per share:
TABLE A
| Three Months Ended | ||||||||||||||
| ($ in millions) | December 31, 2013 | Location on | ||||||||||||
| Pre-Tax | After-Tax | Diluted EPS | Financial Statements | |||||||||||
| Income from Continuing Operations - GAAP | $ | 54.7 | $ | 35.4 | $ | 0.67 | ||||||||
| Non-Recurring Costs: | ||||||||||||||
| Pension settlement charge | 1.6 | 1.0 | 0.02 | Corporate | ||||||||||
| Refinancing fees | 11.1 | 7.2 | 0.14 | Interest Expense & Other | ||||||||||
| Jefferson Street Move: | ||||||||||||||
| Relocation Costs, including interest | 5.0 | 3.2 | 0.06 | Aerostructures (Primarily) | ||||||||||
| Accelerated Depreciation | 5.1 | 3.3 | 0.06 | Aerostructures (EAC)** | ||||||||||
| Disruption | 3.2 | 2.1 | 0.04 | Aerostructures (EAC)** | ||||||||||
| Adjusted Income from continuing operations - | $ | 80.6 | * | $ | 52.2 | $ | 0.99 | * | ||||||
| Non-GAAP | ||||||||||||||
| * Difference due to rounding. | ||||||||||||||
| ** EAC - estimated costs at completion with respect to contracts within the scope of Accounting Standards Codification 605-35, "Revenue-Construction-Type and Production-Type Contracts" | ||||||||||||||
Net sales for the first nine months of fiscal year 2014 were $2.827 billion, a four percent increase from net sales of $2.716 billion last fiscal year. Net income for the first nine months of fiscal year 2014 was $164.0 million, or $3.11 per diluted share, versus $231.7 million, or $4.43 per diluted share, in the prior year period. The year to date results included $22.7 million pre-tax ($14.7 million after tax or $0.28 per diluted share) of costs related to the Jefferson Street facility move, approximately $11.1 million pre-tax ($7.2 million after tax or $0.14 per diluted share) of refinancing fees and approximately $1.6 million pre-tax ($1.0 million after tax or $0.02 per diluted share) of pension settlement charges. The prior fiscal year period included $2.2 million pre-tax ($1.4 million after tax) of integration costs associated with the Vought acquisition and charges of $5.1 million pre-tax ($3.3 million after tax) for early retirement incentives. Excluding these costs, net income for the first nine months of fiscal year 2014 was $186.8 million, or $3.54 per diluted share.
During the nine months ended December 31, 2013, the company generated $79.1 million of cash flow from operations before Triumph Aerostructures’ pension contribution of $45.8 million; after this contribution, cash flow from operations was $33.3 million. Adjusting for customer delayed payments which were collected in full in January, cash flow from operations of $33.3 million would have increased to $119.8 million.
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Segment Results
Aerostructures
The Aerostructures segment reported net sales for the quarter of $637.2 million, compared to $676.8 million in the prior year period. Organic sales for the quarter declined nine percent primarily due to production rate cuts on the 747-8 and 767 programs, a decrease in military sales and customer deferrals. Operating income for the third quarter of fiscal year 2014 was $54.0 million, compared to $117.5 million for the prior year period, and included $13.1 million of pre-tax charges related to the Jefferson Street facility move as well as $25.0 million of pre-tax charges resulting from reductions in the profitability estimates on the 747-8 program. The following table details the changes in additional 747-8 program costs and the impact on fiscal year 2014 quarterly results:
TABLE B
| ($ in millions) | ||||||||||||||||
| Total | Q2 | Q3 | Q4 | |||||||||||||
| Q2 additional program charges | $ | 68.0 | $ | 44.0 | $ | 11.0 | 13.0 | |||||||||
| Q3 additional program charges | 17.0 | — | 14.0 | 3.0 | ||||||||||||
| Total FY 14 additional program charges | $ | 85.0 | $ | 44.0 | $ | 25.0 | $ | 16.0 | ||||||||
Operating results for the quarter included a net unfavorable cumulative catch-up adjustment on long-term contracts of $21.3 million, of which $6.6 million was related to the Jefferson Street facility move, $2.9 million was related to the 747-8 rate change and $9.0 million was related to additional 747-8 program costs. The segment’s operating margin for the quarter was nine percent. Excluding the Jefferson Street move related costs and the 747-8 program, the segment’s operating margin for the quarter was approximately 15 percent.
Aerospace Systems
The Aerospace Systems segment reported net sales for the quarter of $211.4 million, compared to $141.1 million in the prior year period, an increase of fifty percent, reflecting the impact of the Triumph Processing-Embee Division and Triumph Engine Control Systems acquisitions in fiscal year 2013 and Triumph Gear Systems-Toronto in fiscal year 2014. Organic sales growth for the quarter was two percent. Operating income for the third quarter of fiscal year 2014 was $32.5 million compared to $20.6 million for the prior year period, an increase of fifty-eight percent. Operating margin for the quarter was fifteen percent. The segment’s operating results included $1.5 million, compared to $0.9 million in the prior year period, of legal expenses associated with the previously reported trade secret litigation.
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Aftermarket Services
The Aftermarket Services segment reported net sales for the quarter of $69.6 million, compared to $74.6 million in the prior year period. The year over year decrease reflected the impact of the divestitures of the Instrument Companies. Organic sales growth for the quarter was two percent. Operating income for the third quarter of fiscal year 2014 was $9.3 million compared to $9.9 million for the prior year period. Operating margin for the quarter was thirteen percent. The segment’s operating results for the quarter were impacted by a decrease in military sales.
Outlook
Commenting on the company’s performance and its outlook for fiscal year 2014, Jeffry D. Frisby, Triumph’s President and Chief Executive Officer, said, “Triumph delivered a solid performance in our
third quarter with the exception of the 747-8 program. In spite of military sales decline and continued military aftermarket weakness coupled with some significant customer deferrals, the Aerospace Systems Group and the Aftermarket Services Group were able to sustain their strong operating margins. We had a productive quarter as we successfully completed the acquisition of General Donlee Canada, Inc. and refinanced our high yield debt due 2017. We continue to make excellent progress with the Jefferson Street to Red Oak transition which remains on schedule and on budget. Strategically, we expanded our relationship with Airbus by securing the recently announced award to provide machined and assembled structural components for the fuselage structure which support the cabin storage bins and aircraft systems for the Airbus A350 XWB.”
“Based on the current market environment, current projected aircraft production and a weighted average share count of 52.8 million shares, we now expect revenue for fiscal year 2014 to be approximately $3.8 billion and earnings per share for fiscal 2014 to be approximately $4.10, which reflects the previously described impact of 747-8 and weakness in military. Excluding the Jefferson Street move related cost and the pension settlement charge, earnings per share for fiscal year 2014 are expected to be approximately $4.75 per diluted share.”
As previously announced, Triumph Group will hold a conference call tomorrow at 8:30 a.m. (ET) to discuss the fiscal year 2014 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 29th to February 5th by calling (888) 266-2081 (Domestic) or (703) 925-2533 (International), passcode #1630473.
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.
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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, profitability and earnings results for fiscal 2014. 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, 2013.
FINANCIAL DATA (UNAUDITED) ON FOLLOWING PAGES
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FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(in thousands, except per share data)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| CONDENSED STATEMENTS OF INCOME | 2013 | 2012 | 2013 | 2012 | ||||||||||||
| Net sales | $ | 915,816 | $ | 890,565 | $ | 2,826,844 | $ | 2,716,434 | ||||||||
| Operating income | 84,779 | 134,359 | 319,096 | 418,247 | ||||||||||||
| Interest expense and other | 30,115 | 16,767 | 70,146 | 50,667 | ||||||||||||
| Income tax expense | 19,271 | 42,369 | 84,998 | 135,834 | ||||||||||||
| Income from continuing operations | $ | 35,393 | $ | 75,223 | $ | 163,952 | $ | 231,746 | ||||||||
| Earnings per share - basic: | ||||||||||||||||
| Net income | $ | 0.68 | $ | 1.51 | $ | 3.18 | $ | 4.67 | ||||||||
| Weighted average common shares outstanding - basic | 52,024 | 49,750 | 51,548 | 49,608 | ||||||||||||
| Earnings per share - diluted: | ||||||||||||||||
| Net income | $ | 0.67 | $ | 1.43 | $ | 3.11 | $ | 4.43 | ||||||||
| Weighted average common shares outstanding - diluted | 52,806 | 52,464 | 52,798 | 52,343 | ||||||||||||
| Dividends declared and paid per common share | $ | 0.04 | $ | 0.04 | $ | 0.12 | $ | 0.12 | ||||||||
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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, | |||||||
| 2013 | 2013 | |||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 25,415 | $ | 32,037 | ||||
| Accounts receivable, net | 466,393 | 434,158 | ||||||
| Inventory, net of unliquidated progress payments of $138,763 and $124,128 | 1,127,758 | 988,963 | ||||||
| Rotable assets | 39,567 | 34,853 | ||||||
| Deferred income taxes | 48,401 | 99,546 | ||||||
| Prepaid and other current assets | 22,555 | 24,481 | ||||||
| Assets held for sale | 27,401 | 14,747 | ||||||
| Current assets | 1,757,490 | 1,628,785 | ||||||
| Property and equipment, net | 932,067 | 815,084 | ||||||
| Goodwill | 1,780,296 | 1,706,151 | ||||||
| Intangible assets, net | 988,605 | 994,619 | ||||||
| Other, net | 69,088 | 66,792 | ||||||
| Total assets | $ | 5,527,546 | $ | 5,211,431 | ||||
| Liabilities & Stockholders' Equity | ||||||||
| Current portion of long-term debt | $ | 45,355 | $ | 133,930 | ||||
| Accounts payable | 257,908 | 327,426 | ||||||
| Accrued expenses | 250,338 | 280,469 | ||||||
| Liabilities related to assets held for sale | 4,225 | 2,621 | ||||||
| 557,826 | 744,446 | |||||||
| Long-term debt, less current portion | 1,576,179 | 1,195,933 | ||||||
| Accrued pension and post-retirement benefits, noncurrent | 465,204 | 671,175 | ||||||
| Deferred income taxes, noncurrent | 378,972 | 313,396 | ||||||
| Other noncurrent liabilities | 249,773 | 241,323 | ||||||
| Stockholders' Equity: | ||||||||
| Common stock, $.001 par value, 100,000,000 shares authorized, 52,442,164 and 50,123,035 shares issued | 52 | 50 | ||||||
| Capital in excess of par value | 865,216 | 848,372 | ||||||
| Accumulated other comprehensive income | 18,910 | (60,972 | ) | |||||
| Retained earnings | 1,415,414 | 1,257,708 | ||||||
| Total stockholders' equity | 2,299,592 | 2,045,158 | ||||||
| Total liabilities and stockholders' equity | $ | 5,527,546 | $ | 5,211,431 | ||||
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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, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Net Sales: | ||||||||||||||||
| Aerostructures | $ | 637,202 | $ | 676,791 | $ | 1,979,838 | $ | 2,060,622 | ||||||||
| Aerospace Systems | 211,402 | 141,059 | 636,411 | 431,710 | ||||||||||||
| Aftermarket Services | 69,556 | 74,587 | 216,880 | 230,625 | ||||||||||||
| Elimination of inter-segment sales | (2,344 | ) | (1,872 | ) | (6,285 | ) | (6,523 | ) | ||||||||
| $ | 915,816 | $ | 890,565 | $ | 2,826,844 | $ | 2,716,434 | |||||||||
| Operating Income (Loss): | ||||||||||||||||
| Aerostructures | $ | 53,973 | $ | 117,450 | $ | 218,784 | $ | 358,972 | ||||||||
| Aerospace Systems | 32,504 | 20,562 | 106,887 | 69,739 | ||||||||||||
| Aftermarket Services | 9,297 | 9,856 | 30,678 | 32,430 | ||||||||||||
| Corporate | (10,995 | ) | (13,509 | ) | (37,253 | ) | (42,894 | ) | ||||||||
| $ | 84,779 | $ | 134,359 | $ | 319,096 | $ | 418,247 | |||||||||
| Depreciation and Amortization: | ||||||||||||||||
| Aerostructures | $ | 30,206 | $ | 24,180 | $ | 83,003 | $ | 72,133 | ||||||||
| Aerospace Systems | 10,823 | 4,707 | 27,911 | 13,670 | ||||||||||||
| Aftermarket Services | 1,862 | 2,283 | 5,603 | 6,897 | ||||||||||||
| Corporate | 1,211 | 1,162 | 3,764 | 3,445 | ||||||||||||
| $ | 44,102 | $ | 32,332 | $ | 120,281 | $ | 96,145 | |||||||||
| Amortization of Acquired Contract Liabilities: | ||||||||||||||||
| Aerostructures | $ | (8,380 | ) | $ | (6,219 | ) | $ | (20,135 | ) | $ | (19,774 | ) | ||||
| Aerospace Systems | (5,877 | ) | — | (14,238 | ) | — | ||||||||||
| $ | (14,257 | ) | $ | (6,219 | ) | $ | (34,373 | ) | $ | (19,774 | ) | |||||
| Capital Expenditures: | ||||||||||||||||
| Aerostructures | $ | 33,661 | $ | 19,740 | $ | 132,204 | $ | 66,165 | ||||||||
| Aerospace Systems | 5,713 | 4,461 | 15,988 | 11,060 | ||||||||||||
| Aftermarket Services | 2,728 | 3,336 | 10,795 | 10,811 | ||||||||||||
| Corporate | 430 | 926 | 2,810 | 1,620 | ||||||||||||
| $ | 42,532 | $ | 28,463 | $ | 161,797 | $ | 89,656 | |||||||||
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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 Adjusted EBITDA, which is our net income before interest, income taxes, amortization of acquired contract liabilities, curtailments, settlements and early retirement incentives, depreciation and amortization. We disclose Adjusted 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 Adjusted EBITDA as an operating performance measure and, as such, we believe that the GAAP financial measure most directly comparable to it is net income. In calculating Adjusted EBITDA, we exclude from net income the financial items that we believe should be separately identified to provide additional analysis of the financial components of the day-to-day operation of our business. We have outlined below the type and scope of these exclusions and the material limitations on the use of these non-GAAP financial measures as a result of these exclusions. Adjusted EBITDA 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 Adjusted 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 Adjusted EBITDA to net income set forth below, in our earnings releases and in other filings with the SEC and to carefully review the GAAP financial information included as part of our Quarterly Reports on Form 10-Q and our Annual Reports on Form 10-K that are filed with the SEC, as well as our quarterly earnings releases, and compare the GAAP financial information with our Adjusted EBITDA.
Adjusted EBITDA 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 net income has included significant charges for depreciation and amortization. Adjusted 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 Adjusted EBITDA 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 of our ongoing operating performance because the isolation of non-cash income and expenses, such as amortization of acquired contract liabilities, depreciation and amortization, and non-operating items, such as interest and income taxes, provides additional information about our cost structure, and, over time, helps track our operating progress. In addition, investors, securities analysts and others have regularly relied on Adjusted EBITDA to provide a financial measure by which to compare our operating performance against that of other companies in our industry.
Set forth below are descriptions of the financial items that have been excluded from our net income to calculate Adjusted EBITDA and the material limitations associated with using this non-GAAP financial measure as compared to net income:
| • | Curtailments, settlements and early retirement incentives may be useful to investors to consider because it represents the current period impact of the change in defined benefit obligation due to the reduction in future service costs. We do not believe these charges (gains) 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 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. |
| • | 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 Adjusted EBITDA reconciled to our net income for the indicated periods:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | ||||||||||||||||
| Net income | $ | 35,393 | $ | 75,223 | $ | 163,952 | $ | 231,746 | ||||||||
| Add-back: | ||||||||||||||||
| Income tax expense | 19,271 | 42,369 | 84,998 | 135,834 | ||||||||||||
| Interest expense and other | 30,115 | 16,767 | 70,146 | 50,667 | ||||||||||||
| Curtailments, settlements and early retirement incentives | 1,561 | 2,030 | 1,561 | 5,137 | ||||||||||||
| Amortization of acquired contract liabilities | (14,257 | ) | (6,219 | ) | (34,373 | ) | (19,774 | ) | ||||||||
| Depreciation and amortization | 44,102 | 32,332 | 120,281 | 96,145 | ||||||||||||
| Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 116,185 | $ | 162,502 | $ | 406,565 | $ | 499,755 | ||||||||
| Net sales | $ | 915,816 | $ | 890,565 | $ | 2,826,844 | $ | 2,716,434 | ||||||||
| Adjusted EBITDA Margin | 12.7 | % | 18.2 | % | 14.4 | % | 18.4 | % | ||||||||
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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, 2013 | |||||||||||||||||||||
| Segment Data | |||||||||||||||||||||
| Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | Total | Aerostructures | Aerospace Systems | Aftermarket Services | Corporate/Eliminations | ||||||||||||||||
| Net Income | $ | 35,393 | |||||||||||||||||||
| Add-back: | |||||||||||||||||||||
| Income tax expense | 19,271 | ||||||||||||||||||||
| Interest expense and other | 30,115 | ||||||||||||||||||||
| Operating income (loss) | $ | 84,779 | $ | 53,973 | $ | 32,504 | $ | 9,297 | $ | (10,995 | ) | ||||||||||
| Pension settlement charge | 1,561 | — | — | — | 1,561 | ||||||||||||||||
| Amortization of acquired contract liabilities | (14,257 | ) | (8,380 | ) | (5,877 | ) | — | — | |||||||||||||
| Depreciation and amortization | 44,102 | 30,206 | 10,823 | 1,862 | 1,211 | ||||||||||||||||
| Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 116,185 | $ | 75,799 | $ | 37,450 | $ | 11,159 | $ | (8,223 | ) | ||||||||||
| Net sales | $ | 915,816 | $ | 637,202 | $ | 211,402 | $ | 69,556 | $ | (2,344 | ) | ||||||||||
| Adjusted EBITDA Margin | 12.7% | 11.9% | 17.7% | 16.0% | n/a | ||||||||||||||||
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FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
| Nine Months Ended December 31, 2013 | |||||||||||||||||||||
| Segment Data | |||||||||||||||||||||
| Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | Total | Aerostructures | Aerospace Systems | Aftermarket Services | Corporate/Eliminations | ||||||||||||||||
| Net Income | $ | 163,952 | |||||||||||||||||||
| Add-back: | |||||||||||||||||||||
| Income tax expense | 84,998 | ||||||||||||||||||||
| Interest expense and other | 70,146 | ||||||||||||||||||||
| Operating income (loss) | $ | 319,096 | $ | 218,784 | $ | 106,887 | $ | 30,678 | $ | (37,253 | ) | ||||||||||
| Pension settlement charge | 1,561 | — | — | — | 1,561 | ||||||||||||||||
| Amortization of acquired contract liabilities | (34,373 | ) | (20,135 | ) | (14,238 | ) | — | — | |||||||||||||
| Depreciation and amortization | 120,281 | 83,003 | 27,911 | 5,603 | 3,764 | ||||||||||||||||
| Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 406,565 | $ | 281,652 | $ | 120,560 | $ | 36,281 | $ | (31,928 | ) | ||||||||||
| Net sales | $ | 2,826,844 | $ | 1,979,838 | $ | 636,411 | $ | 216,880 | $ | (6,285 | ) | ||||||||||
| Adjusted EBITDA Margin | 14.4% | 14.2% | 18.9% | 16.7% | n/a | ||||||||||||||||
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(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
| Three Months Ended December 21, 2012 | |||||||||||||||||||||
| Segment Data | |||||||||||||||||||||
| Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | Total | Aerostructures | Aerospace Systems | Aftermarket Services | Corporate / Eliminations | ||||||||||||||||
| Net Income | $ | 75,223 | |||||||||||||||||||
| Add-back: | |||||||||||||||||||||
| Income tax expense | 42,369 | ||||||||||||||||||||
| Interest expense and other | 16,767 | ||||||||||||||||||||
| Operating income (loss) | $ | 134,359 | $ | 117,450 | $ | 20,562 | $ | 9,856 | $ | (13,509 | ) | ||||||||||
| Curtailments and early retirement incentives | 2,030 | — | — | — | 2,030 | ||||||||||||||||
| Amortization of acquired contract liabilities | (6,219 | ) | (6,219 | ) | — | — | — | ||||||||||||||
| Depreciation and amortization | 32,332 | 24,180 | 4,707 | 2,283 | 1,162 | ||||||||||||||||
| Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 162,502 | $ | 135,411 | $ | 25,269 | $ | 12,139 | $ | (10,317 | ) | ||||||||||
| Net sales | $ | 890,565 | $ | 676,791 | $ | 141,059 | $ | 74,587 | $ | (1,872 | ) | ||||||||||
| Adjusted EBITDA Margin | 18.2% | 20.0% | 17.9% | 16.3% | n/a | ||||||||||||||||
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(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
| Nine Months Ended December 31, 2012 | |||||||||||||||||||||
| Segment Data | |||||||||||||||||||||
| Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | Total | Aerostructures | Aerospace Systems | Aftermarket Services | Corporate / Eliminations | ||||||||||||||||
| Net Income | $ | 231,746 | |||||||||||||||||||
| Add-back: | |||||||||||||||||||||
| Income tax expense | 135,834 | ||||||||||||||||||||
| Interest expense and other | 50,667 | ||||||||||||||||||||
| Operating income (loss) | $ | 418,247 | $ | 358,972 | $ | 69,739 | $ | 32,430 | $ | (42,894 | ) | ||||||||||
| Curtailments and early retirement incentives | 5,137 | — | — | — | 5,137 | ||||||||||||||||
| Amortization of acquired contract liabilities | (19,774 | ) | (19,774 | ) | — | — | — | ||||||||||||||
| Depreciation and amortization | 96,145 | 72,133 | 13,670 | 6,897 | 3,445 | ||||||||||||||||
| Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 499,755 | $ | 411,331 | $ | 83,409 | $ | 39,327 | $ | (34,312 | ) | ||||||||||
| Net sales | $ | 2,716,434 | $ | 2,060,622 | $ | 431,710 | $ | 230,625 | $ | (6,523 | ) | ||||||||||
| Adjusted EBITDA Margin | 18.4% | 20.0% | 19.3% | 17.1% | n/a | ||||||||||||||||
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(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Adjusted income from continuing operations, before income taxes, adjusted income from continuing operations and adjusted income from continuing operations per diluted share, before non-recurring costs has been provided for consistency and comparability. These measures should not be considered in isolation or as alternatives to income from continuing operations before income taxes, income from continuing operations and income from continuing operations per diluted share presented in accordance with GAAP. The following tables reconcile income from continuing operations before income taxes, income from continuing operations, and income from continuing operations per diluted share, before non-recurring costs.
| Three Months Ended | ||||||||||||||
| December 31, 2013 | Location on | |||||||||||||
| Pre-Tax | After-Tax | Diluted EPS | Financial Statements | |||||||||||
| Income from Continuing Operations - GAAP | $ | 54,664 | $ | 35,393 | $ | 0.67 | ||||||||
| Non-Recurring Costs: | ||||||||||||||
| Pension Settlement Charge | 1,561 | 1,008 | 0.02 | Corporate | ||||||||||
| Refinancing Fees | 11,069 | 7,151 | 0.14 | Corporate | ||||||||||
| Relocation Costs (including interest) | 5,041 | 3,256 | 0.06 | Aerostructures (Primarily) | ||||||||||
| Jefferson Street Move: | ||||||||||||||
| Accelerated Depreciation | 5,084 | 3,284 | 0.06 | Aerostructures (EAC)** | ||||||||||
| Disruption | 3,224 | 2,083 | 0.04 | Aerostructures (EAC)** | ||||||||||
| Income from continuing operations - non-GAAP | $ | 80,643 | $ | 52,175 | $ | 0.99 | * | |||||||
| * Difference due to rounding. | ||||||||||||||
| ** EAC - estimated costs at completion with respect to contracts within the scope of Accounting Standards Codification 605-35, "Revenue-Construction-Type and Production-Type Contracts" | ||||||||||||||
| Nine Months Ended | ||||||||||||||
| December 31, 2013 | Location on | |||||||||||||
| Pre-Tax | After-Tax | Diluted EPS | Financial Statements | |||||||||||
| Income from Continuing Operations - GAAP | $ | 248,950 | $ | 163,952 | $ | 3.11 | ||||||||
| Non-Recurring Costs: | ||||||||||||||
| Pension Settlement Charge | 1,561 | 1,008 | 0.02 | Corporate | ||||||||||
| Refinancing Fees | 11,069 | 7,151 | 0.14 | Corporate | ||||||||||
| Relocation Costs (including interest) | 7,786 | 5,030 | 0.10 | Aerostructures (Primarily) | ||||||||||
| Jefferson Street Move: | ||||||||||||||
| Disruption | 6,913 | 4,466 | 0.08 | Aerostructures (EAC)** | ||||||||||
| Accelerated Depreciation | 8,033 | 5,189 | 0.10 | Aerostructures (EAC)** | ||||||||||
| Income from continuing operations - non-GAAP | $ | 284,312 | $ | 186,796 | $ | 3.54 | * | |||||||
| * Difference due to rounding. | ||||||||||||||
| ** EAC - estimated costs at completion with respect to contracts within the scope of Accounting Standards Codification 605-35, "Revenue-Construction-Type and Production-Type Contracts" | ||||||||||||||
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(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
| Three Months Ended | ||||||||||||||
| December 31, 2012 | Location on | |||||||||||||
| Pre-Tax | After-Tax | Diluted EPS | Financial Statements | |||||||||||
| Income from Continuing Operations - GAAP | $ | 117,592 | $ | 75,223 | $ | 1.43 | ||||||||
| Non-Recurring Costs: | ||||||||||||||
| Curtailments | 2,030 | 1,289 | 0.02 | Corporate | ||||||||||
| Integration | 250 | 159 | — | Aerostructures (Primarily) | ||||||||||
| Income from continuing operations - non-GAAP | $ | 119,872 | $ | 76,671 | $ | 1.46 | ||||||||
| Nine Months Ended | ||||||||||||||
| December 31, 2012 | Location on | |||||||||||||
| Pre-Tax | After-Tax | Diluted EPS | Financial Statements | |||||||||||
| Income from Continuing Operations - GAAP | $ | 367,580 | $ | 231,746 | $ | 4.43 | ||||||||
| Non-Recurring Costs: | ||||||||||||||
| Early retirement incentives | 5,137 | 3,262 | 0.06 | Corporate | ||||||||||
| Integration | 2,227 | 1,414 | 0.03 | Aerostructures (Primarily) | ||||||||||
| Income from continuing operations - non-GAAP | $ | 374,944 | $ | 236,422 | $ | 4.52 | ||||||||
| * Difference due to rounding. | ||||||||||||||
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(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, | ||||||||
| 2013 | 2012 | |||||||
| Cash provided by operations, before pension contributions | $ | 79,142 | $ | 286,654 | ||||
| Pension contributions | 45,800 | 56,028 | ||||||
| Cash provided by operations | 33,342 | 230,626 | ||||||
| Less: | ||||||||
| Capital expenditures | 161,797 | 89,656 | ||||||
| Dividends | 6,246 | 6,001 | ||||||
| Free cash flow available for debt reduction | $ | (134,701 | ) | $ | 134,969 | |||
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, | |||||||
| 2013 | 2013 | |||||||
| Calculation of Net Debt | ||||||||
| Current portion | $ | 45,355 | $ | 133,930 | ||||
| Long-term debt | 1,576,179 | 1,195,933 | ||||||
| Total debt | 1,621,534 | 1,329,863 | ||||||
| Less: Cash | 25,415 | 32,037 | ||||||
| Net debt | $ | 1,596,119 | $ | 1,297,826 | ||||
| Calculation of Capital | ||||||||
| Net debt | $ | 1,596,119 | $ | 1,297,826 | ||||
| Stockholders' equity | 2,299,592 | 2,045,158 | ||||||
| Total capital | $ | 3,895,711 | $ | 3,342,984 | ||||
| Percent of net debt to capital | 41.0 | % | 38.8 | % | ||||
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