TGI - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Triumph Group Conference Call to discuss our Fourth 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. Please ensure your pop-up blocker is disabled if you are having trouble viewing the presentation.

listen-only a in currently mode. You're a There comments following introductory session management. will be by the question-and-answer On company, of following behalf the statement. read like the to I would now of forward-looking Certain XXXX. of within call on Securities constitute statements the Reform this meaning the Act Private Litigation statements cause involve be may forward-looking materially performance any future actual These different factors, forward-looking uncertainties or other or results, or the and from statements. known statements results, implied achievements risks, performance unknown and which Triumph's to in expressed achievements expected note is press non-GAAP on GAAP can Please company's measures financial of found www.triumphgroup.com. that reconciliation included the to comparable their be release, measures website at the in which

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

Daniel Crowley

Kevin, Aerospace and generated our good per a midpoint report had all the Structures Group free earnings and year, ranges you, continuing fourth Support guidance fiscal business. Product pleased share our for sales, Integrated and reshape We're annual to cash organic flow. quarter and net Triumph growth the Triumph successful solid Systems that across a on to exceeding while sales close morning. to business to units, Thank

to expanded for Product fourth improving prior strong over our the recognition year organic turnaround segments for on fiscal revenues our volumes reported We driven by organic Support a and Systems year-over-year content in narrowbody and support net of for the pleased customer's and times. XXXX. reflecting also are growth sales quality programs. growth also with increase our quarter, the Integrated systems X% Quarterly

margins and Support our quarter. unprofitable in programs. As achieved exit mid-to-upper portfolio a on quarter in and operating of Product non-core the largely and reshaping the teens both efficiency, programs GAAP were Integrated losses with our Systems focus of the continued result associated operational structures fourth

our value with complete systems our free flow we restructuring we far first Consistent in business, increase year-over-year. our continue benefits the ramp-up in in As QX the to positive creation quarters our the expectations, seven in and thus of ability we're profitability strategy. cash time achieved validating the and for integrated transformation to focus completed our and confident underscoring programs strategic last

and intensive strengthen cash expect programs, operational we to efficiencies of ahead, higher margin business the new structures our result the Looking on of resolutions as pursuit cash performance recent opportunities.

Importantly, we repayments. program and to XXXX FY advance from positive be cash cost transitions anticipate net despite

milestones. to Our financial improved commitments by investors predictability operational of on increasing deliver what ability ability and our This of to enhanced the achieve and indicative we quarter forecasting, is expect can controls restructuring. as our our in each was complete

airspeed move state. closer we future gaining are We as towards our

the X, with performance Our and GXXX work. result agreement Industries improved to wing of the for operating strategy a operational enable we is announced developed system of Working of derisking an IAI, transition Aerospace our April detailed deployment. On Israel portfolio a with transition manufacture. closely seamless plans direct we Triumph

completion terminate Our upon contract of will transition. with this IAI

free at on our For value ensure the the cash another performed GXXX the transition structures represents we location work flow. optimal business, step is as path our to improving

by support structural formally surfaces Embraer to will of also Technologies the for assign and agreement providing producing Aerospace engineering manufacture program to components EX ASTK, contract Korea. continue to program control composite an We support. into entered Triumph the to

to to remaining consistent and focus and aftermarket core compete GXXX structures The our is interiors A&D with strategy of in Global actions and similar EX growing segments, in our complex well-positioned systems the business. GXXX are Following our the on markets. XXXX, transitions structures and business

the military we've consolidations our factory structures delever of repositioned will segment balance of that maximize suppliers outcome. result completed MRO programs, strengthening are customers note in as announcing X interiors on several in business process sheet, focus can review no strategic strategic will to XX there or are change Structures April we review on XX Aerospace start value Now and X and that de-risking help that the involve exploring other By I X the to strategic be on original and more backlog commercial This for us we both enable part progress process, helping of one our and significant transactions companies our to we're new assurances operating divested systems, our business. of long-term in and or we able this announce winning or programs. markets. this which roles this alternatives believe

further we these this a otherwise further approved disclosures the required. or Board has of Beyond specific where remarks, until do the to that intend company is comment not appropriate on front action, determined course

our Support customers began X a core serve a Integrated restructuring, and not we Interiors the around of of this I As team in shareholders. positioned as focused to My Systems, Triumph stronger that a financially and set emerging timeline have better year is specific reminder, from offerings. quarter XXXX years April process. excited for and our leadership conclusion Product create We fiscal organization, are value for

offerings manufacturing This the million billion our which in advanced the rate, intellectual We X% our exceeded Triumph improving for systems new business both and year. year-over-year our for for the quarter growth as is wins $X property aftermarket on in focus and and $XXX product evident is steadily invest and win will by to in OEM evidenced core continue customers. backlog. higher

with greater a new wins agreements MRO and support included quarter and profitability and included engineering generation in Asian flow. military and programs. agreement carriers. Other pursuing its services benefit wins a improved cash European major backlog support opportunities Fourth of new provide program, selectivity commercial competitiveness in will manufacturer Our to aircraft an aircraft to next long-term UAV to

independent advantage Integrated than Systems our units provider, Support a operates third-party business known Product MRO eight best support. MRO spares MRO OEM of across we're business By While facilitating to taking businesses and and Aerospace transfer million revenues also products. our these maximize Together practices, stations. can high-margin related certified of Triumph's $XXX repair business Triumph confident our is of as part-XXX comprise that successful the well X more synergies

set operating risen profit, opportunity conclusion, XXXX. FY we pipeline To helps MRO and support continuous entered our by and lean efficiency XXXX promote XX generate and sales, increasingly Over these out control into cash across our we with commitment our over to partnerships that organic across improvement cost, positive we in on and year-over-year. has and global and to focused deploy us Triumph better translate XXX% Triumph the operating to margins culture of in system improve momentum cash factories. on past reduce risen and months, continue achieve and This flow In all XX-plus a free from fiscal the result, And which is XX% it year we our the inventory standardization EPS our has basis. core, an expect partnership average be as initiatives a growth size to market. year MRO and annual

We on the XXX turn events extend to tragic it condolences MAX. closely and to to recent developments monitored want over I the our surrounding victims' those I Before touch Jim, families. Boeing the

forecast anticipate the in impact material of of production program a or planned Boeing with adjustments filing over early the expect revenue. not by in we financial do disclosed SEC time. April, performance on next we the Triumph's result contributed as The percentage And on of production months XXX rate we annual the rates a higher over several MAX. historically single-digit has As our

de-risk working in to months rate Jim? continue work spans capital, guidance. the adjustments XXX capacity to actively that, overtime operational component can results minimal normal take delivery internal given schedules. and the that financial the potential support factories more of our to manage shorter us and And several will be in With accommodated production MAX, with utilization FY adjustments concern will further supply our We used We through chain. supplier suppliers with the any areas next XXXX the with of Jim detailed now levels. shop to

Jim McCabe

Thanks, good morning, Dan, and everyone.

Our the guidance the above within across and coming are evidence net or sales, annual EPS for our With of predictability improved our results ranges year. cash business. in

business cash an anticipated, performance quarter, taken flow actions unit of process for reduction, to in cost improvement and positive improvement on free for our yield in favorable be the results we've indicating consolidated the and I us we positioned and basis. begun XXXX. have performance that cash the significant areas and profitability generated adjusted will As discussing reshaping portfolio in fiscal

for So release press please and explanation our the see supplemental our slides adjustments. of

adjusted core Slide X reflecting you'll Before segments, update FY we was to and income you And find this forma and I prior consolidated summary Slide the FY performance, comparable organic was fourth actions our a introduced actions comprised operating planned interiors with results provides we an Support million which actual on their key business, quarter. On XXXX. on More our is in included is X, $XX quarter. Integrated portfolio Slide characteristics. and of our basis a X, of XX. XXXX forma pieces we our pro of our XXXX detail our were discussing greater Product for Net Aerospace pro financials forma these fiscal Adjusted the executed Systems sales financial our to quarter, pro on all margin the our the and insight year results for Structures Slide begin on basis of X%. quarter. information on operating segment. of This last performance the provides business provided these the of

to Turning XX. Slide

reduced related Systems our which the quarter better modest Connecticut aftermarket segments Margins driven points from costs, facilities, Integrated such growth X% Sequentially, basis for consolidated sales the fiscal quarter. XXX, which AXXX, the improved fourth relative reflect year-over-year. reflected future, results. On the XXX our primarily find another in Integrated XXXX in the just points to essentially XXX severance, margin body QX. our by military and for development by With in higher were prior our the program our basis, These and narrow OEM quarter over the year, cost again to in increased XXX basis investment prior XX, compared On results. XXXX year, Slide increases on in to FY respect You'll work. sales sales positioned as and organic platforms approximately to comparable complete, business the is segment margins of the organically Systems net sales.

efforts to aftermarket partnering revenues, business. We our to Support segment including opportunities see continue through with our Product expand

costs. severance offset Turning comparable to operating year-over-year, and result in Slide on Asia offset of sales. and growth our Support benefits organic basis, XX. Support increased domestic Fourth were quarter X% improved partially margins segment approximately an reduction Product mix reflect were by The up product sales by as for a Product cost

year, mainly Excluding structural the wing due we business kits costs, revenue operating continues the cumulative a due adjusted Structures by by through on of cost. partially provide on programs $XX EX points forward mainly programs Aerospace manufacturers to offset GXXX Structures the assist catch Segment the production entered reduction The shift included business commercial lower includes into to million million supply in were and Last sales to up a expertise On to unfavorable in XXX The margin program, certification. to are would the increase to loss were an to the catch engineering operating programs basis X% quarter. XX. loss Structures' X%. severance results down design the GXXX margin basis, forward development summarized and and GXXX. The Aerospace continue Gulfstream. approximately a cumulative charge on And that Gulfstream. with margin organically the program. operating million net transfer its exiting Slide agreement chain Aerospace manage an of up leverage was $XX $X to the approximately severance

generated Turning quarter we positive cash $X million. the during approximately to Slide XX, flow as free we of anticipated

transit year. invested consuming in guidance. we've divestitures Capital For the over the certain million business. quarters. ramping million $XX Integrated million businesses On reflects $XX executed was the value. Slide And provided programs our cash capital the quarter. $XXX the quarter approximately supportive working The quarter, million to $XX cost cash our the liquidity. the back within divestitures $XX little full favorable a of working which Systems the in our over in proceeds of and in in The made in Global of over were several and path to the helped impact XXXX net capital million for year. restore $XX year, $XXX net We quarter ongoing is driven million and This past used for increased transition meet of FY fourth million and to performance requirements. the customers XXXX inventory XXXX $XXX for XX by of used on restructuring we've fourth Fourth the programs cash program of has debt EBITDAP. use we we is to sufficient impact million with summary to our the non-core quarter and in year. reductions substantial million, Working FY expenditures generated full our this $XXX liquidity capital

Our net approximately debt $XXX was the quarter cash our availability billion, end the $X.X at approximately was million. of and

all our financial of We are in covenants. compliance with

impacts XXXX, pending expects FY expect billion. a based of to delever further take of anticipated forward, production continue Looking FY we to the transfers, FY Slide be to to guidance, on the XX billion and XXXX $X.X is to revenue for Triumph XXXX. program approximately in actions aircraft including company rates summary our $X.X

to adjusted EPS $X.XX $X.XX. expect of We

Our guidance the are rate a received which has year. potential valuation quarters will XX% and of to effective partial net release be Cash million allowance. assumed due of $XX consistent tax refunds be normalized to a in first for the year, QX to the taxes the for for assumes three be reduced

We $X the second in cash the be flow generation cash expect more year half between used the half. first year the for by of in full anticipated We and million. $XX free to offset than cash million

FY guidance liquidation we to expenditures expect $XXX $XX advances $XX million, more shows million. XX And $XX generated XXXX, the approximately capital to drills the million into that expect detail. the for customer from which of in cash We cash million. operations Slide to of range include would million be of in of $XX

XXXX, are prospects three executing FY confident As past we the been of we've restructuring delivering the impacts financial results, about into our and the forward years. we favorable enthusiastic over move program reflect for

efficiencies we continue position, to As shareholder we liquidity invest strengthen in growth value. can drive our increases and in and meaningful

Dan. to turn the I'll call Now back Dan?

Daniel Crowley

strategic forward Thanks, work Jim. by well-positioned game We're we for plan restructuring have year at grow to Triumph creation and look cleaner questions are actions are us, much executing backlog. core the this that benefiting drive taken, we've succeed you the our in to capabilities the is continue fiscal positioned With compete, clear happy long-term. value over behind much of our time. from confident investing new any We to a programs, and our and we take Guided XXXX.

Operator

officers ask the questions follow-up open Morgan. you Instructions] you Seifman Our JP [Operator to of everyone would company to first this opportunity comes the and participate. floor give from question the one question At with time, that yourself like to that any may question Seth one to We to have. the limit

Seth Seifman

Thanks very much and morning. good

you and what get in months could And go kind from ask about what the to XXXX XXXX saw And initially wanted far of fiscal if about what what kind of between about the past XXXX? How talk profitability ago? are I outlook Integrated you year in we this and three So to Systems. there? changed steps anticipating maybe the for you're fiscal

Jim McCabe

XXXX. had And this And past moving Seth. in Integrated Jim. consolidations We brought could new we we're challenges. consolidations. ramping rates FY back program as see, online. depression historical with It's we year completing during some some as went through Thanks, We dealt towards margin some some capacity We're you the Systems.

that margin. back high some normal and the to behind the see seasonality in most we'll to now think with looking I year. is teens low margin during But forward to of progression XXs we're us get

Daniel Crowley

revenue gears revenues. solutions in gears, that you year this XX% ramp-up factories the give has another geared example loose a which I'll they an XX% they'll and gearboxes, Yeah, the produce in saw year see and business, in add and precision our two

and cost those margins So margins and expediting But meet spending required some year. on at did we've as the money both return. full an come recover we we'll see been equipment on ramp, talent the to expediting. of That capacity the in expense

Seth Seifman

of burden Seth. XXXX? a there. if Thanks, great. EX year, you fiscal fiscal talked fiscal just basically absorb Great, January, burden thought cash about transition the guidance follow-up, left to much away the to for in you this advance flow if going about until that burn advance we is - and after then, that's How could that's is And that's maybe, XXXX, And you XXXX; amount transition, how the underway in by the cash GXXX I which have stuff go the think much that? is through as

Jim McCabe

Sure, Seth.

does is year. cash million liquidating free flow next guidance $XX It $XX us million a Our of for to quarter advances. include $X

you we're happen transition cash year. advances. this, in about to the the programs of We approximately going have is of is years. have The use around million of within also several $XX $XXX net programs over those And This exiting. million the

$XX programs, to million $X $XX and didn't in advances be So million be which higher, we months. XX would end million if higher weren't liquidating if we would XX to $XX transitioning have will

Seth Seifman

Great.

much. very Thanks Okay.

Jim McCabe

you. Thank

Operator

Our comes next from Research Partners. Vertical Sinha question with Krishna

Krishna Sinha

thanks. Hi,

released I bit on X target margin Structures is. as this earlier. months But Aerospace year it forma keep ago your changed pro think pro you you fiscal for that a assuming little those segments targets intact somewhat. now, XXXX And X forma Seth you've touched

changed how in there, those just you through you you given us are margin where pro walk of give get can So forma targets and why a profitability? maybe walk currently

Daniel Crowley

Sure.

planning So process. the margin estimates our are off

result have drivers. bottoms-up a summer. the It ended of this it's but many a that, We And just rigorous ago. weeks a process, done It planning few there's in annually. starts is

these of year's our cost And to is not which year's we I best think last provide this than little updated this estimate numbers in year's a and I'll there's plan going But you, a more to going plan, tell revenue had conservatism able I'm and plan. forward. be reflect So piece-by-piece. walk

Krishna Sinha

EBITDAP you X% in segment, Aerospace How XX% going size a that margin move your current Structures, And EBITDAP much targeting of if if just from on what driven that, would just And could Okay. kind XXX-X? by XXX-X of to that is you margins. you're excluded away? in be specifically

Daniel Crowley

because don't just of one the I of specifics have piece that's it. XXX-X,

is last Global some I XXXX losses. cash. this a actually significant the we probably using was think bigger And lot of That the losses driver program generated it that quarter. exited year, past

Jim McCabe

has supports franchises; programs core I spending, what like that on the XXXX, XXX, seeing some we got is good think funding been and business loss-making have jet absent GXXX, These programs CXX; our been Global military had variants; you're loss-making they've always GXXX. EX have both margins. the Business work, that XXX, XXX, program. which the by freighter structures, on GXXX, masked tanker VXX, the and better And spending

lot some of the just programs at of It's have beyond a to is drag that on a EBITDAP business the margins. margins be recovery that the been of getting shining core through. XX% So good those

Krishna Sinha

thanks. Great, Okay.

Operator

Our next from Suisse. question Robert Spingarn comes Credit with

Scott Deuschle

Hey, good for Rob. morning. It's Scott actually on

any on change buyer of of business Or Aero-Structures Just of review, overlap terms see not divest in in Bombardier's potential announcements recent maybe the the there? there expect much light in you you business? Aero-Structures to buyers potential would own terms interest do its

Daniel Crowley

looked certainly, regional overlap, accomplish the at similar what Bombardier defer and I'll hope not And has jets. announced. but where process. a are we there's But have So in to to stronger cells businesses. they presence They they them their highly in on

They a have and plants mix. presence customer support structures. different different We military are geographic large regions. in in commercial stronger structures a Their

been years Three We're in like excited they we've entities. and to Global different achieve deliver really ago, XXX what business. struggled to the Hawk. really on the they're programs structures about able XXX or So operationally

much better in we're Now, a place.

we're But of There's in a updates has future. programs options going really set expect business. far more the be now We're and for the think a our are people. that we healthier And are. customers out that's more business to And to there diversified are talking happy we assets lots market. than in may portfolio have with it's broad other the options Our the to a what of see performance.

Scott Deuschle

slowed just like I'm And quite down the Aero-Structures looks main now But which next a you. a square been isn't with supporting? business that in what CapEx? being CapEx, in So a helpful. trying if programs to year. And business then, that then you. on to you - just That's of offer are that you're bit, historically user Thank that, just step-up guiding taking you can CapEx? having terms of flavor segments if Thank are your

Jim McCabe

Sure.

more planning growing already to We've Systems. of of are in the also CapEx, we we some have coming year. we Integrated to them Many we're So now a little efficiency spending working a committed programs. projects. are, are in And on the CapEx

with of efficiency in from that a the we was sustaining, growth. away So was moving prior and just that lot structures are work CapEx towards

going For narrowbody the and investing program, we're for example, we're at that doing automation off. down programs And on capacity Georgia, with million dollars, a that's Milledgeville in some equipment. we're grinding XXX ramping several Macomb new pay in doing to new in

Daniel Crowley

production now big equipment last we our add printing, make year that and programs. and Jim and where composites to aluminum list, for that That's that's and the facility own supporting I'd lay-up for production rates to support automated three titanium, of Spokane XD of parts last composites, Milledgeville. it. in couple are years is bets our as that substrate material then we've XXX. NDT at all mentioned, And the higher both announced we Airbus kind made from different manufacture active can of in compression molding

investing call The welding it, we've technology. is in been other And category both, thermoplastics.

blind You and and both can on that breakthrough joints and position as use aircraft. support well over these as technology our to the their thermoplastics joints are It's certifying processes perform term future that Boeing thicknesses. of welds to automation for composites non-contact different heads Airbus a

in done examples different past. are playing than in Triumph in So composite the those space structures a space the way or has of

Jim McCabe

IT the whole our of continue in synergies and can standardize And systems infrastructure, we upgrade so more to group. get invest to we out

Scott Deuschle

you. Thank

bet. You

Operator

comes next with Myles from UBS. question Our Walton

Myles Walton

morning. Good Thanks.

Daniel Crowley

Good morning.

Myles Walton

or then make the forma off, may a thanks non-core, and tough know color. then it's pro happen. forma for to pro the presentation may of divestitures I not and First for core

have to of really it's that level help disclosure. So

of though. corporate you the Can in million call segment, $XX that of that back Now can core expenses layout your leaner the not of much expense. under paired are be this terms How business? in

Daniel Crowley

did year, company reduction and machining smaller in about and to and SG&A $XX cost competitive. a fab, make with in we last the fact QX, a of And tracked that cost. need just and more Well, overall million overhead divestiture in the was

going Now structures as in through structures, Grand studies in a that And taking out our trade over plants is we're looking and cost on we're at additional in close time then California. business they down Tulsa itself reductions. different cost Prairie, Texas, and

for we're reduction three cost. not the attack So any chain strategic about cost waiting The the to contributors outcome biggest years, review half. to that first supply in of where was

and to Now of more going come operational out savings. that SG&A and see you're overhead more

Jim McCabe

Our corporate variable. as can scale year-to-year go transitioned. down in general. expenses look in have programs at variable. But I if it's down size, we of amount which Most we is scalable the all we with we've

Daniel Crowley

other last And to year for are that down are those two to going for corporate execution. forecasting, to those do planning, smaller help systems plants, non-recurring plants. place better Yeah. standardizing versions, Triumph in one one around is upgrades versions systems. the current we're our is had, refreshing allow our in systems of think, pull And once two. cost different This CapEx SAP wholesale to mentioned XX and do ERP across our portfolio. investments to the IT question. the response ERP will us these And of Jim also I us They is cost. larger the

Myles Walton

has years, corporate elim I last may your a up operating line business that few EBITDA The it. you get about to that's Okay. from over the $XX runs But have smaller. and EBITDAP circle the And put around segment profit million. be as your gone just, to your EBIT to - gotten so

that you take until today? line of where $XX million? Kind underlying elim and corporate So can that

Jim McCabe

be that Yeah. a I there's goes transformation, a one-time don't give down very think to that but volume that in can specific in I they of it lot There's as the reducing are going are is expenses people departments scalable. serving. And we there that multiple non-recurring overtime. have tell can companies reduced are target, for

Myles Walton

All right. question cash. And maybe then on

front. tax cash the On

do $XX So to the some million you When if year. material the is good you in time taxes have pretty get cash imagine pay this you'd carries? next future, think

Daniel Crowley

I latter true. think is the

We carries. some good have pretty

We guided taxes, think assets. have not year's we lot was I next And than we that. said more significantly tax cash a

several we're tax next a not So federal years. payer for

Jim McCabe

What $XXX million we we million. we're excited years about used used The just in that year ended, two really is cash. $XXX ago,

positive Now flow, able advances. exits We're transitions, more spite there. repayment worked getting and of of that a forecast to We hard cash we're finally cash doing really of program to get to in flow. couple positive still

can reduction some and much we're ago. We additional years we have levers on cost we two take. But were place in than a better

Myles Walton

guys. Thanks, Okay.

Operator

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

Cai von Rumohr

much. you very Thank

net change new $XX be in Is So in that advance advances to so would go $XX this of you mentioned offset year? than less million the $XXX repayments, million terms year. million there any to this coming in that

Jim McCabe

is Cai. advances. So There good planned question, no

decided to any. we for conservatively plan not So

three Although, we've gotten advances every years. year, last

planning when But than opportunities lower look it's conservatively. our capital course settlements costs and for our entering normal when anything not contracts of we're for to especially So new we're us. customers advances, have

the any assume advances. does new not guidance So

Cai von Rumohr

going assumption Maybe then half? give of how the you. in some EX Thank us XXX? in first details same the cash flow going the the much cash And secondly, to your the the and of for GXXX? you turning on second of in half; to be positive is expect burn, out for same when be to the And do

Jim McCabe

would is evenly any you that's full think quarterly that cash the be transition. there's for said most those, three the spread that the now. I of one give And don't right can the I the I year XXX And through using $XX So of it's different million. than about

Daniel Crowley

cost tail because in modest XXXX because transition and of improved year, Jim's to we're pretty FY it, negotiations the though, shut-down in coming XXX transition. the that With units the ASTK. on to more in We And actually XXX, got EX, and happens The the more in faster forecast. some price building that has so are following cost, have performance. do

Jim McCabe

Yeah.

into next year, the next about go will So the months year. XXX in six

be year. I EX year, think will this the next XXX, and done

Cai von Rumohr

I I how the to shutdown point? some is am in was like a correct there bigger $XX And it Or $XX EX, number? XXX, So we're is at $XX million the thought talking much million that cost million?

Jim McCabe

the but cost not EX this next of is It program, year. there in would mostly and So year. tens the year. some be in only that's it's is millions in for And shutdown this the XXX

Cai von Rumohr

very you Thank much.

Operator

question Kahyaoglu Sheila with Jefferies. next The from comes

Unidentified Analyst

morning. actually for Good is this Sheila. Hey, Ray on

Jim McCabe

Good morning.

Unidentified Analyst

you. Thank

three and working today about Just capital segment wondering we just, think Global improvements should certainly how usage? capital think then just working should on potential level, XXXX. drivers segments usage we about the But of basis a how segment

Jim McCabe

there with got is, in some there guess, Integrated reduce can ramping some have Systems. good inventory Systems. to we to be programs, the offsets initiatives so So I Yet, our Integrated efforts, through reduction our starting inventory on Systems. support. programs ramping have pools. invest inventory needing to we net Support, continue reduction first out of whole, in On Integrated We But looking, Product to the rotable we're

repairs. time. you're see see a how especially With want because with and - grow that more capital think have So rotable we're that's programs of get we they business, to to partnerships over the we're transitioning there with to the I the going a local to structures business little decrease, working going working in airlines, pools

So this direction. is the of kind

Daniel Crowley

billion, better our procurement, on billion. about to working divestitures, Let program we planning, less material and me work exits factories. and startup, to When about billion inventory actions level. lot one of take XX just managing $X.X that $X it months ago, to attack capital than $X.X able through on a program our down we and We're up were started

$XXX around I think we ended or year million so. the

chains. $XXX work And $XXX setting on assets internal happen on turn million. are the by because have between rely million all and For continue business think that continuing supply this that doesn't they to point operating at expectations. factories can a them And we working reduce divestitures than set and to we're this to capital to. targets our rather company, we unit of by year, doing different to by setting we're just And goal

of all But like reduce the structures. fast have businesses the to small XX% expecting Others slower them of year-over-year turns component have Some facilities. capital. working turns, a in in about commodity we're

Unidentified Analyst

you. Thank it. Got

Operator

from next Strauss David Barclays. comes with Our question

David Strauss

Thanks. Good morning.

Jim McCabe

morning. Good

David Strauss

actions that to take mentioned anything or you're may Aerospace beyond XXXX. you to Jim, what Are going company may delever do Structures? speaking fiscal in not the you to you further with

Jim McCabe

EBITDA. increase in primarily about speaking I'm the

our flow forecasting, down we through our so So are in We're generation forecasting will positive cash divestitures cash that free not come flow. some debt guidance. any

about Although, EBITDA that's really increasing as review to our It's leverage. always the a actions. reduce that's we and going possibility

$X.X billion there, So net $XXX.X year think million round the in EBITDA debt. for last I about our and if think you of it's with million disclosure about we're so $XXX

about EBITDA $XXX that we're we XX%, times margin up So on If went just got basis. X to million. up, say,

down You're to times. X

So we're to through our improvement. reduce profitability going leverage

David Strauss

flow Okay. XXXX. benefited And cash in think Got I it.

running call that on - mentioned have by You to the there? pay guess, you $XXX $XXX advance, an that when this on the still I expect back? to through last payables. about sitting do out Is million million And

Jim McCabe

offset That's million that. liquidations $XX year, enrolled And advance. last a at now quarter. as the $XXX more repaid being million million you of million of than about that's is $XXX That $XXX know, worth part into an advanced repaid we

David Strauss

Okay.

as pushed it's future out the into well. So

Jim McCabe

Correct.

David Strauss

Thank you. Okay.

Daniel Crowley

Thank you.

Operator

next Our comes SunTrust. with question from Ciarmoli Michael

Michael Ciarmoli

for good Hey, Thanks questions. guys. morning, taking the

got know if and the Integrated should power look year core structures be normalized Just should I free laid And we this know we in of you the ongoing. But burn core we how kind cash thinking you've of cash the potential takes you Product going of business process repayments. look at Supports flow at would? But flow? kind and I with forward. as for the the what Systems puts the out

Daniel Crowley

best that $XX were And the all on historically. we businesses lot had of it's for on a it is deck, we've also it And - the and think either can core So, of that's XX the coming we Page which we X-K, year portability results forma why to guided that pulling out then the this operations, at last related I million. non-core what and were transactions. if you And on actual or to takes at did. line. the transitioned see business the then sold gave look that you, to year you $XXX forma from pro history pro way forma take We And out at year. transfers cash million to look yeah, we the to a we've losses divestitures positive last pro product basis filed all in our to you the

transferring programs million, range $XX million looking then that million $XXX that about you that, at you're move of of you programs for $XXX So to Then then, legacy using recognize the were coming of you $X $X the just a the forward $XX plus year to $XX guided. year. this million and XXXX. $XX items million $XX the advances in top you we plus into those look liquidating are million, $XX know on The in we million. at million guidance And and adjusting gave they to

Now, adjusted business for on million future business that's this year, but basis. given our right from now, a million to looks like $XXX $XXX years, $XXX of haven't and it guidance core at to we total an progressing what

Michael Ciarmoli

just now? versus new margin. apples-to-apples, Got rolling XX% down EBITDAP to that the of it. XX% pro past the drove EBITDAP that been margin, way Integrated comments margin XX I XX% had now It refinement programs the more the was all that if at and at that points and but forma you on And EBITDAP then for like margin. then don't XX% just one sounds an the was tick more XXX that on back over basis on the Systems, that EBITDAP you're go on of was days, XXXX, to know kind just And

Jim McCabe

month. completed is And AOP, in We're a the last It new investing in EBITDAP. tuning it programs. is our of which fine

as make the conservative also we want they And hit weren't little to maybe on a think a plans I we our sure probably more we're numbers. year-ago.

Michael Ciarmoli

it. Got

Thanks, Okay. guys.

Operator

comes Herbert Our Canaccord. next Ken with question from

Ken Herbert

Hi, good morning.

Jim McCabe

morning. Good

Ken Herbert

just I or wanted Dan, fiscal Jim to the core ask for the XXXX on business.

to commentary Integrated XXXX? of kind core Support, wondering of sort should the you about about think sort and what segments? of relative growth provide of top-line Product top-line sort that X%. could I'm all-in individual And we of if growth specifically how through around Systems of just some You to you guide would expect there

Daniel Crowley

kind some and - new And got Hawk our it's the out good the market with I'm sure, and of both That the Apache markets last We We're tailwinds, you the of who they plus year, growth. And on benefiting the drone that won example. contracts whether refueling your X% drives, of accessory They're key and projections hear starts. read, has in which lots engine some top-line defense both an those reflects depending you plant. as Defense controls, digital on Black that you've West supports they compete. hydraulics fluctuation that's of Hartford won from the in AXXX. growth. to commercial MQ-XX, AXXXneo, programs, we TX and now. read X%

with up where more is the partnering business, expanding MRO. growth to in And two shifting signing The give that we've there especially business Product agreements, similarly, TIS big up whether divestitures. business. we're transaction from the And carriers some or signing X% services in us push offset That's grown one-off are center And the facilities. has done who to and Support. a higher are those those overhaul it data fuel more after that Asia. X% slightly So than of more on effect market every our of of have depos supporting than be where annuity Thailand, our a we in MRO, business is aftermarket, APU in historically in helping Honeywell the gravity rather divesting rates narrowbody That seeing. year, we to of we're partnerships traditionally

rates So supported by growth we our the past data and market think performance. are

Ken Herbert

Thank you. could. And if I

how aftermarket across and you mentioned military does commercial? this. split both between think But OEM Integrated and I Systems

Daniel Crowley

our Systems. and certificate, MRO work And when So is those aftermarket, over growing of have $X.X $X.X we in do and really of work business, market utilized. to you the all have X billion we about those separately that together. FAA that two fully to business. my and of maintenance billion of and $XXX businesses didn't OEM Historically, a centers MRO. we do they Integrated the our part way revenue remarks that is went it's million work in with And carry own growing about part-XXX it, to third-party combine mentioned out the they capture weren't I it

I've - have Product new finding of And at asked have how and look the to a now, market I got Integrated two we and so great opportunities. taken go they're fresh MRO. Systems. And They leaders Support

I think we didn't pursue before.

with And segment. in cash So profile. it's turn growth good it's work know that work look for you margin and a as more quick good

Ken Herbert

you very Great. Thank much.

Operator

J.P. question Seifman with Our Morgan. next comes Seth from

Seth Seifman

core? verify not generation platform? next existing second structures, you work an structures you as you opportunities of when variant that of a the of aircraft. program wanted week much follow-up. kind as new able you of work is for you've kind out programs. the the Wonder how identify some release - develop ask aircraft last win in particular identified you've And this guys thought given I sort the wanted contract there, to And of being work to that a helping in jet? to Thanks outside I very in aircraft you ask out it's and put just all, just a it if a here with fact I commercial about won other interesting And you're an that business to this not kind

Daniel Crowley

Okay. Great. Thanks.

do identify in of group can and want design a of analysis, finite a and platform we say, thermal contracts, where of due analysis, element EX, bending design, OEMs customers it's Bombardier. structures, haven't to the multiple this that on a did core starts, still show had do the moment, of capacity. drop came yet, structural all, There's the a who in that design people buy time. we're over do off we legacy this execute analysis, shingle where up whether and huge that on taken we fact, new and couple with down to new people that discussed a will build few when we group reason commercial happen you integrity. weighing, verify bid on But we in very we is the a structure have won I cage structural commitments commercial not that work to to And we test, had they we Triumph test a I did OEMs, the its First the drop quarter, rolling engineers can be in and that. asked continuing our happens

we And design months analysis, back, we shortage commit make you'll as with were have competency this investment you a to large good so talk to, ahead. investment. did more Global the able engineering maybe that and are we'll do case. in on XXXX. big contract negotiate support to the hope to of because we business And about a able it to A and someday that's publicly the the to Traditionally, in significantly without of it with

Seth Seifman

Great. Thank much. very you

Operator

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

Cai von Rumohr

follow Thanks on. much so a for Yes. taking

of the the numbers. should business, or it little what's profitability $X.X X much that Did going in pro what's loss how useful So of Y? was any - try rid flow absorb a core about say I of use of that very of million. if for of mean, had the carry a of that repayments? sales get kind forma can a the you're operations and EX? billion had the under of we XXX, it segmentation a underlying mean, in to the Non-core advanced $XX long So there? cash to value I

Jim McCabe

So you're fourth non-GAAP talking the our about disclosure. column of

So quickly…

Cai von Rumohr

Exactly. Exactly. That's exactly, right.

Jim McCabe

are where adjustments on asking to question forma answering you're the for the XX. to So adjustments pro Page the the

So…

Cai von Rumohr

exactly. yes, roughly, now, Yeah,

Jim McCabe

military programs a the is in about some business good cash cash. Those I there Dan losses that there, and talked and we generating we core that's that had generating underlying Engineering generating earlier losses last out but providing earlier. too, have commercial is XXXX but business there's year, what's these and cash we're using Services had to think profitable transitioned are programs cash exactly you're And Cai, Global really I we're of, There But, that that business creating we the EX year. is in losses. on last right that the adjustments, specific not referred a

going through that cash. that column, to So without nonrecurring the of events loss were largely caused adjustments those

Cai von Rumohr

that was the big the was But XXXX divestiture, - wasn't the one. in

are EX, the you what you've given were they? ongoing of the losses? And the what of them put there they are. all $X.X know billion order big We revenues, the kind on XXX, rough roughly, how profitability? magnitude, XXX, one if of The so there - what's into And roughly roughly bag, just

Jim McCabe

that Yeah, out there's repaid well. said add what would so I advances being there I actually to guess, I just as

we already then the $XXX payables So net got that of of and there's had advanced repayments million transitioned.

cash. were column. So of But the you portion give adjustments alone the I advances can't that substantial to that

Daniel Crowley

what EBITDAP XXXX. margin that's we can provide question. into business And to forecast So, to we will Cai, exit you're core FY XXXX what's why asking, the about is get value what It's those I structures business. that a we XXXX entered consider a transitional is in that would we the ask the And year the programs to value? we've out generate? that It's for that programs. think XX% really core to as this FY XXXX an the Once flushed

Cai von Rumohr

And one, business that? Terrific. show reasonable last What you in is you are profit. a $XXX Aero-Structures? Aero-Structures What keeping of kind with core of million about

Daniel Crowley

Sure. Jim. Go ahead,

Jim McCabe

business, this the flooring interior ducting, insulation steady the It's business, is stable very business.

it's market high share. And have We profitable.

Daniel Crowley

on floor Triumph Boeing do today. in bidding and down in compression cabin of for That's aisle, interiors. the plans we're large walking interiors have all the molding we floor a do is the all panels Airbus mentioned technology. and We XX% We of so the I cabin panels, on Boeing's We So plant. do we're where ducting Spokane plant Mexicali composite doing of you composite aircrafts. walk you're as floor,

So one good and that term. the business long keeping it's for we a it's anticipate

Cai von Rumohr

Thank useful. very you. that's Excellent,

Operator

David Strauss from comes with question next Barclays. Our

David Strauss

for follow-up. my taking Thanks

chunk going on of of couple terms year. K, thought, to based divestiture? forward? on what contributions are you anticipate Aerospace have And would significant in overwhelming you bit, pension like questions to how the see we pension, just liability But make that a you you - last on going thinking of looks divesting based would majority some contributions liability sheet. go it the about a pension with on I this year's potentially Structures, do a grew were the have to of how So balance

Jim McCabe

X based because or year. year contributions. the change the the liability of our the during returns assumptions in so, this yeah, the the out spread did doesn't on did the up provide in on lot years. a XX pension that first liability That more Page change year, new go over on So, funding, or the gets presentation, given any pension income, We funding

during all we anticipating $X So XXXX. We're million had to course FY FY about of our $X million XXXX. during the plans

funded We're post-retirement an have We funding million $XX XXXX. in benefits. we XXX. Additionally, $XX the in million OPEB liability,

if the plan. group. more it group, the it could is we we may go kind pension, not. the of have the one no structures remain. at but liability transaction It terms of have joined by resulted. could than parent because under review any several In and XX% structures There to It's of in pension is It sponsored with have

So payments no have our And it's to there's well with to funded are coming plan. pension XX% not are the funded. And up more substantial.

David Strauss

All right, thank you.

Operator

AM of time call Ladies questions This has a and today. Earnings Fiscal at and PM this until we XX:XX Fourth gentlemen, for is Triumph's the Call. replay Quarter till Eastern Eastern Time May XX all This the scheduled run today Standard Group have Time. XX:XX Year XXXX Standard to Conference concludes begin

may access entering and code you parties all You dial now. can participating the for code to XXXX-XXX-XXXX you access Again, a access XXXXXXX. and have can replay All you can and entering access day. disconnect replay XXXX-XXX-XXXX the Thank XXXXXXX. nice dial

Triumph (TGI) 9 May 192019 Q4 Earnings call transcript