TGI - Earnings call transcript Q2 2019

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Triumph Group Conference Call to discuss our Second Quarter Fiscal Year 2019 Results. This call is being carried live on the Internet. There is also a slide presentation included with the audio portion of the webcast. On behalf of the company, I would like to read the following statement. call Securities statements XXXX. Litigation this of the on Private the Reform statements constitute within forward-looking meaning Certain Act of forward-looking or Triumph's and factors, known different forward-looking from achievements statements statements. uncertainties future materially or These other results, implied expected and the performance to unknown be which expressed results, actual risks, cause any performance achievements or may involve in which to can the company's found the reconciliation comparable measures GAAP that financial in measures note website Please press their non-GAAP release, be on at included is of www.triumphgroup.com.

company's Group, Chief ahead, is approval. In and Officer; transcribed not Financial Go and note J. Mr. and I or McCabe, President this F. addition, to Group. James the recorded, this At please the Senior Officer and call property be Chief like Vice written of Crowley. Triumph President Triumph Daniel would Inc. Executive rebroadcast of Jr., time, explicit without introduce may Crowley,

Daniel J. Crowley

our morning. our results Thanks, expectations good met fiscal to Kevin, us is the and quarter fiscal achieve quarterly is keeps and for on The on The year. the commitments XXXX track takeaway unfolding plan. our main from

as XXXX organic to Before negotiations, key I and financial guidance. Pici, company's management. In joined reaffirm and are him I we his on on to Mike review Therefore, we're President strategic supplemental quarter to updates cash to go and EPS year the want we positioning excited net objectives our fiscal the the the we discuss Triumph and as refer and over Planning slides for Relations. reflected portfolio encourage QX, as have Analysis onboard. of further, growth, website, how of future. our cash Financial I Investor our sales, Mike Jim relevant advanced experience we introduce program in and and Vice and have you recently brings who years I XX new to role,

segments and both three second increase Integrated generated Integrated organic Aerospace content across basis include growth net of the year-over-year XXXX, Systems, Systems Support, results a expanded comprise Our on company's the Support FY second the of areas Structures particularly sequentially Organic our XX% and on business increases units strength quarter. and programs. narrow-body for all performed by sales well, quarter, growth prior also posting quarter rate each year. driven net consecutive for the revenues our Product business. XX% business a for these in Product sales of revenues. over two In organic

This our more Over the trailing XX%. underscores represent towards profitable revenue businesses. shift XX months, now they

were enabled QX. Operating growth to through forecast building Integrated our We our is cash programs, focus across XXX, segments, up the Global will to flow three due programs our outline this continue margins up the prudent in the quarter of in quarter of more programs. all attractive to Global F-XX, these on expected the large in on our a eight sun-setting reinforcing which the leading Tanker positive Product commitment and transformation yearend. Strong the prior slightly AXXX, and our follow-through in historic and and quarter efficiency. the awards businesses. by Systems the forward have on XXXX. Five higher the XXX growing margin I'll part more This on and in Ramp-up businesses, contract for were program. momentum cash Cash multi-year include than margin use a moment, are Support efforts, on on continued impact reflect our revenue growth. revenue positive XXXX outpacing consolidated use to operational trends Jim and was more path sequentially this cash pressures

what is Boeing, quality customer Martin, the in such momentum reinforced Airbus prospects. this as because continue in with quarter gives GE, relationships Williams, Triumph's us the QX. of improving confidence I Whitney. want Pratt emphasize expect to & Saab, these Lockheed companies We Wings this to long-term awards this and

intellectual for comprise early design, points to that Accessory through life of property our each Gripen Systems, the versus content of segments. pleased wins one AMAD the the higher We single-engine across proof program. Triumph is the of this this develop, Airframe aftermarket Triumph build-to-print will aircraft are in just We manufacture quarter This And selected or the second Systems and of Mounted Integrated the E/F provide Drives in our fighter. content. saw multirole trend our provide for now support transformation. AMAD Saab growth Integrated

use to at this beginning quarter Farnborough. to Additive agreement GE was Integrated now technology manufacturing with Additive In of win, and announced addition with adopting the is of lead Systems forgings. castings associated the Triumph's our additive the to times expand mitigate at

be and We December in our Military units. expect to to and for three bring enhance machines a additive our Group Triumph area growth titanium company. key to online for continues capabilities and business design across the aluminum our

USS are use, systems both our awards and As on as Through the Air and contract by of overhaul portfolio and which Washington military Triumph training we the growing States of actuation Huntington into of a overall our the product recently adjacent George Boeing, are Integrated economics our announced XX, to part Triumph carrier, on of team Force. was their versatility of selected business. the what continuing the a valve franchise. XX-plus-year the On Systems Systems October these, with like United to announced we contributor want a jet, I the improving efforts supplier major portfolio. aircraft scheduled Boeing's been cash markets Integrated Saab had nuclear-powered our Ingalls diversifying that will Triumph be remote to successful T-X congratulate capture highlighting key our to supply

million across the meet savings position for goal approximately our we remain portfolio and margin expansion. company track work in $XXX part to and consolidations cost to offer announced through majority XXXX completing year like the few of up stats wrapping of are on gains. I'd end progress. to the We As fiscal of our by value, efficiency the in restructuring a of our on of our you committed to April path anticipate efforts the the

and reduced do million As fixed to XX,XXX of company and we've we the persons indirect while noted two-year eliminated span, the costs, on well. can three approximately we reduced to number number early X% taken our our by on We're spend and simplifying head future We enterprise to so resource capacity suppliers We focus of and are XX on $XXX the over and the journey. nine anticipate XX last actions improvements I by what and top XXXX of flow. an Triumph excess this By Over we completing sites And we're planning, a a consolidations of chain expect XX% we enablers Triumph's from in to last from million and waste, the supply X, upgrading provide these square in we've strategic process the planning XX,XXX execution. benefit year. balance X,XXX help to we're periods. have fiscal by divested XX management, IT team of around to two feet, for will on margins the revenues of X,XXX analytics yearend, events $XXX slide our improve run and track count complete Over and reducing of of identified net and reduction, since sourcing as reduce management count Since quality approximately cash improve site this and my divestitures years. anticipate priority reduced together, lean reduce sheet lean eliminate these from allow which and XX% our times. free Further, the for to help And us been still footprint net strengthen million X additional to to with span a systems by companies competition. result our X,XXX planned XX us margin we position. XXXX, our expansion. positive in proceeds and divestitures will inventory an additional enabler key debt

support We're division portfolio Asia to progress partnerships Pratt will years efficient these and a Quickstep, for of key organization and the in has Additive, and Beyond savings, also Airbus, GE & our made Triumph continue Boeing with organization. transformation. divestitures nacelles. Triumph's each Services more to will catalyst three FedEx, including VXXXX be global last the collaborating and cost an Whitney of Aviall XXXX moving and of fleet We've in forward. enhance these Aviation be after partners on potential optimized Southwest, of at been such as growth focused leaner

organization to operational we will is platforms transformation have provide for our the program benefits to in turnaround. not our and growth. part While immediately, leaders wins key final program we and right these the of future across partnerships place functional The that see ensure complete the

business us engage than fuel XX into as market, announced gearing and as completion complex welcomed and systems, and Triumph. managed more that extensive last and acumen We've Bill brings the customers VP of the experience key our same will a leadership and Allen including growing legal support Integrated Thales, preferred and and businesses Parker-Hannifin a Dubey makes leadership partner desire we MRO join leading as to bringing OEMs ideally Triumph Eaton repair services in he as appointments. in global joined strong their as Executive aftermarket a month During as Frank supplier. leadership Pratt hydraulics transformation specifically of as factories of VP Support our Triumph's General her where multinational later at Product our years three from demonstrated structure recently also supported Whitney XX two months, roles chapter. and aerospace, provider suited business. business there's Frank of through Jennifer's Kircher of new company industry and from systems seen and the experience Asian our actuation, And achievement & Executive to unit, Counsel. the solutions in we this more executive Systems. expertise next than a Jennifer years Triumph

place, right With and with we industrial the customers in forward working to aerospace, the our look solve defense hardest and to right plan challenges. leadership their

to the turn flow to the becoming with we efforts Jim, I'd how program contributing over to our on of by yearend. you and cash like XXXX positive I see call additional color Global provide Before it

of supply the expand then second first made our in chain in options. ongoing to quarter on evaluation me program we've that and Let speak the progress

First, delivered a is design the the so Production XX successful far. wings certification Bombardier, ramping completion and of clear aircraft by Canada with up Transport development indication Bombardier steadily we of to celebrated maturity. aircraft with

has We tested are most to fully higher-than-planned traveled at shipment where final work supporting prior the sealed completion factory, to contributed at Texas cost. delivered Bombardier's first. of assembly wing On pressure it's our from recently aircraft our line, and

cash use for production we As the are early expected, contributing costs quarter higher than planned as in higher price the wings than increase. paid, to levels are

stated to continuity discussions and Triumph of We our are years both are of work the wing development Bombardier cash success were cash ensure wings we cost-efficient trend substantially expect customer FY the the August improve use on the that half the realized. companies. second program in deliveries chain that earnings analyzing of continued seeing Recall, and aircraft on spending, and After scope we most to and and and this in on the programmatic to XXXX. as commercial payments of of rapid jointly supply long-term call, receipts have supply program a arrangement increase in year associated and

We beneficial with the our efforts and and focused parties. of year. up drive in to summary, of that exist we to our come goal successful options top success we the we're results, to global XXXX reach provide Triumph's validating value. create While as now throughput Global high-value shareholder Triumph priorities differentiated as half Bombardier program assurance further with remain reduction the and enhance on cannot the expertise. committed to our be inventory up discussions, offerings, confident and shared is to outcomes will of the for are all predictability these we trusted production are second solution any success that In and wrap of the a more program our and restructuring quality and

With we're and positive commitments full per and earnings confident outlook Jim cash to flow work Triumph phase now QX for our restructuring underway, improve the will for position provide of that the specifics final on will its on FY our deliver being the yearend. year. Jim? by including XXXX, more share financial free

James F. McCabe Jr

morning, Thanks, Dan. everyone. Good

were results quarter the second Our heading into we expected quarter. as

We continued goals. financial toward make progress to our

profitability and and the Our follow sales improvement were I flow coming trending projected, adjusted as will quarters. upward will and business performance discussing be on our cash unit an in basis. consolidated

quarter, Systems you'll sales enhance the program On periods. the our of sales due second increased segments compared related the last explanation for the primarily supplemental noted to slide line our million costs and consolidation organic segments. year, Systems see by X% top our These joint to all X%. our find our Integrated volume for is on three slide. slides of business. X, release generated in to last segment are of With up our XX% Net slide of income three new please So, the consecutive prior-year second Embee slightly our operating quarter. facilities' this press were on consolidated adjustments. profitable for and Integrated across and to we was our organic were Integrated XX% is results, after divestiture year-over-year benefit early respect Adjusted investments adjusted Systems growth. organically part up the quarter impacted our year, all work to and quarter on of growth This XX, a over our operating commercial of $XX results future military Connecticut to development growth on efforts several narrow-body that programs expect accounting about Margins for increased segment, margin

XX. slide to Turning

operating segment Product for demand basis, year. for Support on were component structural repairs to by compared last margins sales our and accessories. quarter an Support stronger X% organic stable Second were driven up Product

XXXX XXXX to a Structures million some margins of results adjustments. adjusted the as of $XX TAS both Global $X basis, margin million includes cum negative partially for on up a with margin by the included Their were on forward operating an XX. half million. net On FY reduction operating the programs. segment loss the After slide unfavorable sales summarized improve This XX% accounting program, period. Gulfstream a loss and on $XX catch consistent expect on improve profitability offset an We segment new was which organically. prior-year are charge second forward are slightly program, divestitures, in repair Aerospace we

and approximately XX. the program. This $XXX year-to-date. cash Free advances $XXX the cash was investment the of quarter in cash use slide repayment XXXX to million Turning million use Global reflects and customer during

We quarter was use our quarter for year. expect cash this the peak

million our used offset capital was use used XX by We cash by Capital $XXX $XX XXXX. restructuring program, fiscal about second the million and in the cash million breakeven $XXX year-to-date. expect half of quarter summary FY of mainly is the million with second Global in be year of higher cash driven approximately liquidity. customer working partially payable in $XX cash working similar in QX QX. expenditures the On the capital. net to the and We half million positive repayment in QX and $XX Year-to-date flow – benefit of in advances of in free to were invested first by accounts of and XXXX a slide $XXX in debt million

will guidance. aircraft proceeds approximately XX was Our our production approximately a our summary XXXX our anticipated revenue the covenants. year-over-year from million. of debt our quarter $X.X and represents of anticipate billion, FY X% which of to $XXX is Based continue divestitures our to We the rates, $X.X XXXX net debt, to we with expect of a billion on increase range. guidance be approximately at compliance midpoint end the we financial $X.X in approximately fiscal to was help Slide are availability and net at billion, reduce

year. taxes assumed assumes XX% an guidance Cash for be approximate zero for refunds effective received year. rate tax the of to are the Our net

to capital $XX in We range expenditures to $XX the million be expect of million.

drivers is from expect free Slide full free first year the million our $XXX to full to and XX walk year use cash showing to for free a $XXX the key flow cash the half million. flow. We cash between continue be

our XXXX and half. repayments program both advance second are lower Our cash Global use substantially the in

FY million year Our as similar flow free our to anticipate fourth are year cash higher and, keys communicated, million XXXX cash year guidance Slide QX expect free Global to first of Global XXXX $XX for $XX positive our and last the the will Two the than to use XX to advanced repayments cash quarter. flow cash compared be million the We be use full we XXXX reduction half is estimated for an cash QX the about previously second use use, quarter. achieving in forward. in $XXX highlights the half. both path reduction

relates it the increased as and second the improvement, to Specifically, Global half. we XXXX anticipate neutral reduced driving deliveries, terms travel in payment work, improved cash position the

the the in $XXX optimize capital to people, the summarize, in free to invest systems for throughout $XXX use cash to To continue fiscal to million range working we We processes year, million. continue of company. expect and

year. top FY with through improvements. makes cash operational on year the into reshaping We we prospects have of confident will and taking XXXX, can portfolio with put our heading either generation cash growth combined through we actions the remain our with that us, behind for set reductions our when closing, profit and us and line remain fiscal As negotiations on targets. we've back we aggressively and cost which the half the pleased we flow a trajectory free firmly contract manage solidly We're optimistic move we confident positive achieve our In to outsourcing, track in flow. cash goals increasingly been

questions. make the Dan? back Dan to Now, I'll we'll remarks, call will some then who take turn concluding your

Daniel J. Crowley

initiatives Thanks, enter path our we our and with are results half position forward improving FY provide XXXX XXXX. in path second with FY for clear us Jim. us the performance To our The recap on delivering value our we as quarter expectations. progress, are a line of results second in to

this customer of position From this execution, In multiple know and from improve strength we actions and to and when landscape, team deliberate significantly competitive the we're for will started relationships we our offerings, wins of consolidation where recent Our has Triumph business sustained measures, increased R&D collective through to actions shaping. this success. confident facilities, are testament a was that portfolio the taken it transformation. exceptional improved competitiveness

While all our of deliver our there our accelerating remains ahead, to stakeholders. now forward strategic work we plan ready turnaround and to to completing enhanced value We're look (XX:XX:XX)

Operator

officers At any the open would this may time, to questions have. to you the of company that floor like the

first with Kahyaoglu Our Jefferies. Sheila question from comes

Sheila Kahyaoglu

morning, Good you the and thank Hey. time. for guys,

Daniel J. Crowley

morning. Good

Sheila Kahyaoglu

When up out you. necessarily this for X, compelling but have first some margins your XX%. around were pretty in stuff results. they the Dan, restructuring showed about it think with Slide adjusted program, quarter, you hasn't there we

you on elaborate should So think could that maybe we how if about forward. going

Daniel J. Crowley

Sheila. Thanks, Sure.

So, the in ERP. we of plan spent we head mentioned to a nine, two money lot do as count nine, of IT we've plants, also implementing to more the two and severance-related costs, first consolidating systems improved I reducing some go years, got

And so, been most of the frontloaded now. expenditure has

contributes look we to our margins. the we'll then it FY XXXX, XXXX, to costs As are at when largely complete restructuring really or XXXX, get complete, start benefit

heavily biggest So, it, it But we down our see at as example. the through been it use expect spent example. the in having to XXX then this year, margins to XXXX, doing Florida a an of big consolidate into consolidations didn't year to has to begin completed cash of program we're for been contribute one FY of has the we'll end flow

fairly restructuring. been be But a of So, and we towards the beyond. we're benefits glad what's XXXX see in to the costing comprehensive expect to very end and

Sheila Kahyaoglu

you Jim. a then, one walk Global for time. more maybe Can you, the you. it. Got And Thank through follow-up

deliveries, net million. I thought What's first slide the I mentioned implies think and it'd be already is $XX half? seems you $XXX million it neutral second you're XX in million We around $XX the half. of this know year million half. and in but changing for the the you higher essentially delivering second cash now increased in used $XXX

that provide So you more. is details up there? Any could going

James F. McCabe Jr

Sure, Sheila. Thanks.

about used quarter, we So, we program the million. was million and about second in anticipated. $XX the first That $XX than on we in that used quarter more

we're we anticipated year. the really versus travel turn the earlier we But second – seeing on. so, And the talking we're forecast work half for the the updated more first. It's our now deliveries about and than

those coupled than there advanced with in terms payment So, as to second – half. – structure had we're the payment fact that's now deliveries in going to some that is there's first the as the paid we get half well in The more deliveries. improve going for some place just deliveries the progress

is cash in So, coupled that second work the improvement for half will driver in the the less with travel costs significant flow. which reduce

it the are half be year. for second we So, forecasting of breakeven to about the

Sheila Kahyaoglu

it. you, Got Jim. Thank

Operator

Our Michael next Ciarmoli question from comes with SunTrust.

Michael Ciarmoli

Thanks for guys. a Jim Maybe on taking Good Dan Hey. questions. follow-up the question. Sheila's just morning, or

nice of And if sense about are you all you know we Can the be normalized you even should of thinking You business? us the how a give making. operational margin programs maybe can think talk a in guys Structures progress with of T-X. normalized you've about some sort had with really some should military ramp on to – that wins as of the we these they maybe especially margin? How side up newer

James F. McCabe Jr

it's Yeah. Good slightly question Jim. Michael, on were margin. negative. running They

big adjusted I think and this production efficiencies it's X% development an moving the year working on still into the portfolio we're of X% about through last and we the the year about is well as were we're there. and minus basis programs driver minus

programs or renegotiated many you know, As and money those that cash. weren't generating weren't making of we've restructured

well is in. XXXX important – actions to the as the updating moving improve we're going putting mostly the very and portfolio, operational from production So, the come profitability And going as flow. into improvement to those forward think cash flow efficiencies Global from is I cash

business, the high-single margin is we've it's Structures commercial In talked is we'd leaning if before towards more terms a like into what a of military lean bizjet, direction for on If or which to our the we towards teens. low digits. it's get could head, normalized about

Michael Ciarmoli

could color sort any think any or just should about as T-X surprises puts up provide the Okay. win? expect you starts positive if working you of capital just negative ramping we That's that program helpful. that and takes, How on And up? then, and

Daniel J. Crowley

I'll Sure, start.

with that but a potentially it extend it light trainer fighter, Navy beyond will with designed and as T-XX it as it's military based a XXX Air going T-X tactical out foreign because the Force use it the orders, they've starts on hard sales. So, be points, could used to roughly fighter.

in really and built we So, the tails for it's and the the that. part which were flew of a invested Boeing win, program exciting prototypes we wings and two the key a the that platform,

aircraft, key names And components. supplying most components. of on hold we'll do categories has the fact, the structures structures on so, of we'll And and asked announcing be off to Boeing in have components in the involved of in their three also supplier system system T-X used on conference us have there's course been platforms. subsystems due they this later those have IP until and also month. and there But components them we'll that provide that involve other they are

maturity. design there's So,

that both concept. I mature refinement. design message is to There'll that advanced are have manufacturing to role think a and program development we're Triumph's negative in of with a benefit glad design systems. programs are it's on a the T-X well cash the going embedded the be the concepts profiles. as not the So, XX-year not big main on program, some It's rest and structures only But but

Michael Ciarmoli

it. Got

James F. McCabe Jr

Yeah. on foundational to At come. as for or on This financial program is the next don't we year material impact year, the a really a this see it's program. decades in moment, early

Michael Ciarmoli

Got we investment should no it. a so then? material investment – And no capital then expecting cash working be

James F. McCabe Jr

correct. That's

Michael Ciarmoli

Thanks, queue. guys. back jump I'll the in Perfect. Okay.

Daniel J. Crowley

Thanks, Mike.

Operator

with Our comes next Seifman from question JPMorgan. Seth

Benjamin E. Arnstein

actually Good Seth. for This Hey. Ben on morning. is

Daniel J. Crowley

Good morning.

James F. McCabe Jr

morning. Good

Benjamin E. Arnstein

this able how offset but from thought, I going cash were to able I wanted to expected $XX use Global the that? you are million maintain to up you guidance, cash bit more with ops ask here. kind a year program of, the little about

Daniel J. Crowley

on we're and our redesigns. story, of Okay. cash get number wings. each of in Operationally, But was you is up, carry and design and place Oak early outstanding. in what customer the completed of performance Bombardier ago, rate certain in the About went through those substantial year and Triumph payments. we're test worked And now for it's certified. generation design amount as quantities our finally results with a point followed of awarded years in shipping the three of Red bad done that of to been the drives Those wings a are deliveries going XXXX, factory and And half the the wing really and have was where closely second at getting see flight wing the out this program the goes in half increasing those paid of terms second to year. a the of the we're in completions maturity, program

James F. McCabe Jr

And about the we're for, re-profile we achieve we driver And negotiation. is biggest go pay the probably able that and some have the can that of think we customer should we increases through when that get payments those back of cost to talked those.

So, half the and out shipping benefit the payment is negotiated the inventory getting really terms. the second of

Daniel J. Crowley

we set to full final get burning it other concurrency. we're we is, changes don't travel that and in by automation the invested. we're to And off chip I'll to in the work XX really half able build to we've benefit going of we're The remaining have about second related benefit all of the call early production build, issues and estimate the clean a are which get that

saw you build, reflect QX not clean a the we're in to So, that what quite travel that some call I'll day. works costs that of zero

Benjamin E. Arnstein

the helpful. FY That's able I you. you're in And for think guess, should how Thank if that? on some cash range we to shed XXXX, about the color of generation program

James F. McCabe Jr

that programs $XXX to we've this said until not for you to million cash get FY million. like $XX positive XXXX, tend So, go

this be So, program. on cash XXXX use probably to going there's during FY some

expecting how tell in the But negotiated, you – the of finished for might balance exactly be. we've much terms neutral that cash of We to surge shipments shipment the because planning our payment haven't year. this we're and the

Benjamin E. Arnstein

Thanks.

Operator

with Rumohr comes von Cowen question Cai next Company. from Our &

Jeff Molinari

Molinari helpful. you by split can to for be my segment there forward? of if the Hi. question, would much taking expect Q was and going Yes. from – back restructuring, give you please on can any can us for give going the then guys. color This Cai. – is the topic we I Or Jeff wondering how Thanks restructuring

Daniel J. Crowley

file we so Is Q in I the it. So, in yet, have the press don't that release? filed when will be it

James F. McCabe Jr

No.

Daniel J. Crowley

we're it able can one market it you'll So, close break that to tell that file I Structures rest and out reducing today I you'll is – the of restructuring on. $X to you consolidation which but see side with the million or after Integrated Systems, see And be have we're is on been focused don't the part that going there. and which the overheads. may $X it's and have around the working probably million

So, It It's location. period-over-period. broad based. not down coming it's one in is

FY a XXXX. lot in It $XX quarter. expect it less We of the was in million

James F. McCabe Jr

Yeah.

been bit. They add did the consolidations to were most consolidations – what in components restructuring used up will Systems. Product fairly I and this did Just of two to small. consolidation That work is mentioned Integrated XXX high-dollar have We Texas year. we structures. three-to-one Florida. transition And the wrap a in But maybe to then, components from little a Support. call we

So, that we costs the brick restructuring done, FY mostly upfront related to of mortar. XXXX on of most goes severance call and have a it, small into is since cost tail work I'll

Jeff Molinari

impact can, on to and helpful of the the How program. guys. some Can progressing? Tulsa has expectations for you another us moved Thanks. the follow-up topic if GXXX on of That's that? And update the I timing it give

Daniel J. Crowley

the profitable. sequentially IAI factory, Tulsa. forward no path is reduced There built it it that outstanding. – the and We're over of then wings It the We on that place program. remained in Israel. originated IAI is support with Spirit came discussions with yet discussion when loss-making to supply program way of not part but happy Spirit. – product. the loss about what's It transition. transition the the Sure. IAI a in and small time, The Triumph It's aircraft best Triumph. we And for ensure to designed really in GXXX, It and wings earn is from was Gulfstream. the a best quality of commercial over was it's to program support still It is reasonable the that program. purpose from the a was can We've return. at the is with

Jeff Molinari

Thank Okay. you.

Daniel J. Crowley

Jeff. Thanks,

Operator

Our comes Poponak Goldman Noah question from next Sachs. with

Gavin Parsons

Noah. Gavin on morning. It's Good Hey. for

Daniel J. Crowley

Good morning.

James F. McCabe Jr

morning. Good

Gavin Parsons

had of year. But flat last a that's know comparability but accelerating the strong But million. looking obviously, it year-over-year with $XXX at revenue So, at there's maybe you I backlog, the looking about revenue, some issues organic, like divestitures. looks nicely, book-to-bill up maybe reflection

revenue? but guess, awards that So, I about think booking two, longer in you or year-to-date? quarter all about weren't to And, you think One, necessarily booked do have book-to-bill how how two the do visibility maybe new converting questions.

Daniel J. Crowley

I'll Okay. start.

So, our years. backlog accounting rules is two

dollars. as of phase, they So really substantial development millions don't contracts and the such the in T-X orders over engineering manufacturing of is starting needle an move backlog because are and of EMD, on the life the which hundreds and come program with

to we've of business, year point contributing it's a second able grow year zero organically, yet conversion and to out sales, Support grown like within typically our has is, aftermarket begun to do the Product faster been spare revenue we've The and growth. backlog X% as sales which has

tailwind So us for that's another on growth. revenue

James F. McCabe Jr

Yeah.

going to T-X And which now The program, goes gave direct into revenue. – XXXX production drivers it's And is hard window. revenue narrow-body so, for example mostly year-over-year revenue up we're on. about the draw the key as right sales that Global the Dan a of half the from of it But is is the X% be was two-year to are the line drivers of the to outside programs book-to-bill and our growth. which perfect

Daniel J. Crowley

of a similar five-year with announced tend their multi-year be GXXX, MRO a Gulfstream fabrication carrier out We programs follow-on thrust contract won to awards a of profitable these contract We contract. the for to with all major recently and Asiana business, the GXXX with backlog. our reversers, overhaul a fleet an pleased for five for of history part only two really was year the a option been the and growth. fairly organic I'm we Most in there acquisitions, better hasn't companies years. quick with Triumph by growth Triumph's first of roughly count two turns. But the that's years

So, reflecting that in to we're our revenue. how now XX% biggest and that driver is to able the win, been the for book-to-bill growth has the in relearn team

James F. McCabe Jr

Yeah.

we're So, grow in guidance range. of the the half, midpoint to X% second to planning least our at around

half. second the into continues growth So,

Daniel J. Crowley

winning wins, to the platforms that's of AXXXs the Integrated those a plus have additional we programs drive helping content biggest Boeing on beyond two Systems, rate-driven growth. XXX, lot And competitive increases, we're in

Gavin Parsons

to Okay. next over whether update the years down, margins you be G-XXX P&L on give That's are an flat on cash And up? you on helpful. or volume you and program two us and that anticipate just can where then,

Daniel J. Crowley

approaching build there's rates So, you build because can We're retain program rate. transition of of box. any talk building all program use, – Gulfstream year. steady this the still the on major imagine wing a the plant last to to Gulfstream, we middle next the parts. rate. Gulfstream in anticipate don't cash That But a procure Savannah on to with doesn't We program. like the cash currently swung work rate And year. GXXX. will year us in about reductions We a from positive the nine And figures that negotiations we

or XX Airlines boxes we'll yet Savannah then (XX:XX:XX). to support another deliver, got so we've so, And and wing

we're much their program, for better in place we're overall on and needs. fully So, that cash a supporting profile

James F. McCabe Jr

Yeah.

were forward and I negative, predictably much it's us. think that stable, cash on that's for program we're positive we that a the more cash program going now key is profitable

Gavin Parsons

you. Thank Okay.

Operator

comes Our of next question from Ron with America. Bank Epstein

Kristine Tan Liwag

guys. Kristine morning, This for Ron. is Good Liwag

and capital forward your advances back color changes And more of core programs advances, losses structures. margins to by expect cash what in difficult underlying unit the how little in be the should we on repayment yearend? you a operations it's the segment? to Could and you where net into in cost about today Structures margin some With the working think in is and those from accounting and provide

James F. McCabe Jr

Kristine. Thanks,

before segment complex. discussed because margins is So, the challenging we've that cash and as know are very you it in

We have lot of different a programs.

users. Some are cash

of of It's be is you be these of out. programs cash biggest the generators. may right second future, cash years the year, you the the it a neutral future. that we half And the the We've for the programs view about a going that because as legacy with margin cash think for now. cash, talked have the The it's GXXX negative us lower, couple some clear we're cash amount But cash going is the cash ago, XXX, margins much are And for lot – forward. to user foreseeable of tough a several still to generator. we're using and has know, we what generators that had pay accrual positive. in some But XXXX to get to we addressing I segment there's for going going the are turn foreseeable for of be programs, until that are program. with segment stable restructuring, group. cash it And the Global of is through are Some able it. example military cash to And not going cash a in improving

Kristine Tan Liwag

is negative the net group on still net So, a cash basis?

James F. McCabe Jr

That's correct.

Daniel J. Crowley

And news... the good

Kristine Tan Liwag

when And go the ahead. then you mentioned –

Daniel J. Crowley

Yeah.

on years. good for contract on to adding a correct been number platform to a The news issues Just flow to Jim's the of future is going positive create is we've cash Structures doing in point. heavy lifting

swung and this So, cash When outsource in what a GXXX I'll is that but most give also year to the XXXX. that currently that to to fiscal Korea has a a user we already cash details, positive who of mentioned decided example. ASTK already positive in And you FY negotiations, we I in And positive margin flow. GXXX's begins an cash. makes Embraer. from to swung we the mentioned

ramp a what's really users. forward business, cash we're remaining we So, as cash end period programs renegotiate this behind up the production the been to use looking in we development put we of for high us, the and

James F. McCabe Jr

profitable to There's and businesses a cash of core there, we're peeling in those. positive back get to

Kristine Tan Liwag

normalized normalized kind plans? or if as a even when of cash positive you're margin you swing segment, in basis? GAAP your forward is And the of mentioned on Structures, net the the the digit you currently – And high-single low-teens on negative margin reported that basis when that and sorry. And a does you mentioned when cash restructuring

James F. McCabe Jr

programs And day when is be haven't we a XXXX towards. the this of put what where segment. margins When segment. some you whole And So, we'll a is out for into turn called basis towards FY the I'm cash in cash now. and not that's essentially, a move give we those But right XXXX, the more the with whole we're challenged we to we're calling our positive are company GAAP positive. talking for disposition on of it planning insight our and goal report we guidance, to for as a

Daniel J. Crowley

panels. with of margins, in of I'd cash floor That's business, like We to and loss-making Interiors very structure that dealing our over X do some attractive a value in thermal businesses programs do the fire that and which make We highlight we're directly. of good drives conversion very ducting. with that's Structures embedded a blankets is for one the really million business. We insulation. lot

Kristine Tan Liwag

on Structures discussed that off parent. months at to possible me. guess, ago table? few and guys of evaluated for at a is if – process what today? so, lastly I A return then, from that a And ago And the or year you what thought this overall or, be bankruptcy splitting point doesn't business – Where would cash positive, point that back your

Daniel J. Crowley

and wide-body no it's where Triumph. a the up on the It various and primes. with the subsidiary. just causes to at minor. commercial customers, They put more not any those really able don't we We're just we to cards down cash was our So, in of and that through longer the was facing address And use At discussions we primary of a those for few of cash bankruptcy consideration a risk were dialogue business negotiations with engagement time, sustainable. were use. us they're said programs jet

Kristine Tan Liwag

Thank you.

Daniel J. Crowley

you. Thank

Operator

comes with Myles question UBS. Our Walton next from

Unknown Speaker

(XX:XX:XX) morning. is Good How This Myles. you? are for

Daniel J. Crowley

Good.

James F. McCabe Jr

Good morning.

Unknown Speaker

was So, I revenue I clarify quarter just recognition million. wanted in things. two to guess, the $XX

the the I the a to think $XX-million-plus it going like be but then – run material have year? like rate quarter first in so million year. is not – was $XX the quarter, so mean million $XXX I full you on for but

James F. McCabe Jr

of quarter talking you're about ASC (XX:XX:XX) impact the XXX and the Lou the year? full on So,

Unknown Speaker

you $XX not then million for divestitures. was $XX in million mean, that the I I material And I slide on but think the full X, guess say. quarter, year, to first benefit, a Yeah. show helping the you offset

million rate in if again just here? So, which second it's think wrong know $XX I go away that first don't quarter, that looking run in I the does at am the half? something Or I

James F. McCabe Jr

It turns in the second half.

Unknown Speaker

then it. It – sorry. Go for does? Okay. And

James F. McCabe Jr

the around – half. does Yeah. in second That's it it turn

Unknown Speaker

the GXXX has completely clear, so just I'm work the million divestitures, not moved. Okay. And $XXX

the now closed? going Texas that all in to East large think Asia take and you that other ones stuff, the talked the all the that long But then, have has time. guys I about, was all that business of

Daniel J. Crowley

clear the a contract GXXX, renegotiation to So, we a consider divestiture. be not

So, to But, yes, closed Long a and summarized. are have about you marketed. small operation we currently our And expect that also Texas Island the close have in numbers it's we and East not being in sites that just that in part quarter of other we the Thailand both then, nine QX.

businesses, to Many costs parties, are built to reduce of done. and product to focus square about overhead businesses, us will the it, X intellectual other businesses feet be get So, planned so and make proprietary will getting these the state of a they'll the just to managed SG&A They of towards. we're and down that units. of really contract better of better It simpler future business with we – end a print really in that's portfolio property, us the driving Many concluded down these while allow don't the by are can million divesture company. company. call really we've get good I'll we're to, right fit manufacturing rest the

James F. McCabe Jr

these Yeah. million of $XXX I annualized for said Lou are that are – in we think businesses pipeline. sales divesture about these worth (XX:XX:XX), our

proceeds just go for net owners our of are have As Dan a better this availability generate they're whole to lot for and mentioned, identified on reduce basis increase they're from revolver who and interest and don't of them. some a us. a – lot build-to-print the manufacturing. We've There will they cash

will So, helpful. proceeds be the

Unknown Speaker

Great. Okay. you, Thank guys.

Daniel J. Crowley

Thank you.

Operator

this this Time. Time today call. XX:XX at at Standard are conference Since earnings available a XXXX Group's until be PM replay further concludes year no X:XX queue, call AM, XX quarter Eastern in Eastern Triumph questions will second November fiscal Standard of the There the there

the the by code and nice access XXXXXXX. day. entering dialing XXX-XXX-XXXX All can and dialing may Thank participating. parties, disconnect. by you access now access Have a replay replay entering can XXXXXXX. code Again, access you You XXX-XXX-XXXX you for

Triumph (TGI) 8 Nov 182019 Q2 Earnings call transcript