TGI - Earnings call transcript Q1 2020

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Triumph Group Conference Call to discuss our First Quarter Fiscal Year 2020 Results.

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listen-only a in currently mode. You're a There comments following introductory session management. will be by the question-and-answer

On company, call of Securities statements statement. within behalf involve the meaning Litigation Certain the to the XXXX. statements following Reform read Act on These the this of constitute of statements I forward-looking expressed Private would forward-looking known Triumph's different or achievements performance be materially implied actual from performance risks, expected or achievements and results, factors, other forward-looking uncertainties unknown the results, and which cause future any statement. may in to or like

the measures www.triumphgroup.com. be at that in found measures note the company's comparable included website their Please reconciliation of financial is can on to non-GAAP press which release, GAAP

may approval. not explicit recorded, rebroadcast please without or be this In property addition, of and note transcribed written is call Triumph Inc. Group,

Group this and like I'd President Senior Chief Executive Crowley, introduce McCabe, Financial and J. Chief Vice Crowley. Officer Go and Daniel Jr., time, At F. Triumph ahead, James Mr. Inc. Officer; President the company's to of

Daniel J. Crowley

Thank fiscal year. call. we results start momentum new Early we quarter our reported with first you, this for QX earnings as everyone and in expectations demonstrating morning, line our our good Kevin, XXXX to welcome

cash as with Organic noted were EPS year-over-year business expectations. in X. Free revenue was line all flow our on up units and page in

positive we As deliver for cash cash free and we to used had pace flow guided. moderate XXXX remain planned, in the on quarter FY as

result $XX the down is Aerospace by quarter million. operating in a the year-over-year Support for deliveries QX. increasing in of use and margins Year-over-year Cash Structures as hardware improved Product

programs. benefits of we as exit Our the operational see of strong structures the segment QX a to had improvement and loss-making begin

new are addressing changes, and prior to by mix proactively development production programs industry-wide on These chain and military with lower year Integrated rate we paced our Systems that are support were commercial than both programs supply constraints margins programs. increasing due in customers.

base that this and high-teens in revenue has QX from increases increased expansion. FY business FY revenue Integrated against reach by QX a cash month-over-month XXXX which year this a a confident are delivered historical of margin to X% periods Systems can margins We Triumph XXXX. preceded historically trend

with in charges reflect improve working Integrated quarter customers Systems. our investments The reported the we've are our remaining to restructuring this performance programs. to red We in retire

Beyond our improvements, our improving Triumph are management supply deliveries, concentrating on efforts reduction, we System. workflow optimizing cost through Operating process and inventory

We that confident the company-wide actions just are these enhance in will performance not systems.

in our box XXXX, kits closed, on and update Gulfstream short program quarter completed fiscal transfers. to successfully seven the A GXXX Since Tulsa Triumph team program the their parts efforts. now delivered Savannah last facility. year Shortly and after supply wing Gulfstream transition to

program the the exited on FY initiatives to schedule. in our these the and successfully the including in budget. Having on second program Korea's the fuselage GXXX I'm of complete move Global the GXXX now of XXXX. to transitions to EX are ability the and closeout the complete time confident transfer EX program in February, FY of in on wing are We and we ASTK IAI, to Bombardier XXXX transfer which plan XXXX driving the remaining both quarter

aftermarket Support to noted recapture on business As emphasis Integrated of our an tail. higher backlog growing Triumph for two remains to with Systems now collaborating page a units top on priority X Product margin with our more content our the

to in and XX% business QX. rate our company our strengthen work to the in pursue selectively from We position new has three grown long-term backlog company-wide growth. These to execute results new our increase over show win continue sustainable and and competitiveness years which to the for strategy last XX%

strategic capabilities Show, Asia. Air and from Engineering highly partnership Air new & bringing maintenance Maintenance. partnership Industries KLM France at the announced exciting This in and together East the strategic quarter Americas, Middle a Europe, Paris capable the offers During we both centers with companies

mature The joint and Air and the turnaround addition cost-effective service customer AXXXneo France's joint offerings fleets possible in will times solutions parties fleets. top Both with our will XXX MRO to such centers, excited are lines. about similar strong relationships entering carriers Pratt leverage more and the to MROs venture. other to Triumph's bottom as team support the planned and grow pursue our partnerships newer of

modifying enabled we on specifics their finalize midsized systems for Systems in to V-XX conversion multi-year the business team actuation received save business system cost the few order A customer $XX a the Integrated We V-XX super agreement. as program work wins pylon jet. for by QX. to off-the-shelf jet million for new actuation our

aircraft. overhaul Product Atlanta such with passenger provide new to services will a on Center as Triumph's maintenance provide maintenance parts major contract service Support units, and repair components. interior Interior of carrier repair interior fleet of narrow-body a won support the sidewalls Excellence seats, airline's U.S. for for the and

plant had quarter from to protect XXX Georgia our details work supplier. first where composite substantial helped on on group a structures struggling taking strong Milledgeville Our deliveries a Boeing

are engineering critical the on gains through performance aircraft SpaceJet are Show, XXX our reductions weight services Mitsubishi moving at aerodynamic partnership enabling we announced Air As and Paris out improvements. where our

contracts team opportunities provides with in Working our this analysis, on engaged future testing which area. also design, Nagoya, engineering may services. eVTOL in thermoplastic closely IP generate growing structures the teams leveraging OEM-level U.S. our We're our and and engineering

segments. a over At customers, to in provide We're three see solutions particularly customers, investors. interest and excited the innovative existing our opportunities Triumph in potential to MRO. and interest about solutions with Air Paris the to and Show, in XXX where expertise in meetings pleased all suppliers, conducted our business we emerging We're Group our strong capabilities saw

in MRO call $XX the this a and highlight our opportunities today XXXX, According third-party Turning aftermarket an actions market grow quarter's and to will $XXX global Page billion expected billion is X, to X.X% research, to space. to by services CAGR.

at the U.S., to and Europe, while strongest seeing in projections the China region, X% projected CAGR growth approximately revenue market of is By reflect the Asia, X.X%. growth X% the

We our Thailand for capabilities. area focus. over XX technical is strongest in our commercial XX rapidly of aircraft Thailand becoming and representatives repair XXX symposium a and global maintenance countries MRO hub a recently for customers repair. hosted is Asia from on

our strategic goals based their team support Product To with one-off one changing from partnerships on and our transactions is to market go-to Support OEM revenue margin expansion approach and carriers.

Product where Support to aftermarket OEM partnering Our lost components well and is System to leaders internally are for the as Integrated recapture third-parties. the Triumph

centers Triumph's Page is on noted our part-XXX X, component-focused. As XX% XX repair across capabilities MRO

at We narrow years. XX body of are over CAGR is MRO that to pursuing market next towards share is expected an our grow the X.X% shifting support

accelerate in divestitures. By capabilities our leveraging Systems adjusted of for our customer MRO margin and the business, revenues of we we free to base FY XXXX have inside Triumph aftermarket repair sales Support contribute and represent growth approximately Integrated $XXX million cash the Triumph's will flow Product total across expansion.

our cost-saving year-over-year, presenting the pursuit to One Phase market, up up X, and XX% our MRO Moving Page pipeline while average partnering Triumph to aftermarket is through size is XXX%.

XX% services best business about our are Integrated business fuel represents controls unit controls such and back all sales MRO and lost which Integrated and from the to engine of sharing claw electronics and as their practices sites pumps. our across Systems provides Systems smaller MRO quantified competitors. Aftermarket to spares leakage We

and engages repairs and improvements, for and from military spare OEMs operators, team work sales Support The Integrated overall both benefits Product while customers. commercial for product airlines, the engine, Systems system and

our aftermarket combined to approximately expansion content Triumph's This of proposition. We're with confident and value overall proprietary we sales XX% Systems our can XX% expand of revenue. Integrated enhances margins when

and both is As strategic underway. Structures announced Aerospace financial parties in business May, the Interest well strategic review from of is encouraging. our

which scenarios or are evaluate We a or potentially all following restructuring selling, business. disciplined process and rigorous all further include the continue and keeping, of to pieces

our to workforce, and communications process the through while We will maintaining continue suppliers. close move quickly, customers, with

by team Aerospace team and of Structures Mobility. and recent eVTOL be agreements value with Structures our recognized Mitsubishi continues Corporation to a the reflecting cleaner perform parallel, well, as customers continues to by we Aircraft provider evidenced Jaunt and Air built backlog. engaged In the

These platforms. weight the and design major and optimizing team and production aftermarket structures, provide our support engineering aircraft to opportunities projects present these on cost, exciting in future for

of original to we our having XX companies progress summary, we're portfolio, highest sold XX pursue shareholder making far, in So, as operating solid the the on our reshaping value. thus path

over to of the the MAX to of XXX aircraft's flight. delays return on turn comment the Before it impact want I I Jim, to

impact We in close remain the do and continue most the with forecast announcements financial our to FY on of recent contact on material analyzed Triumph's performance. Boeing impact our suppliers. XXXX anticipate We've and not

was and other to business impact minimal parts of a XXX inducting insulation deliveries slowdown our which interiors uplock of and provides deliveries lesser in on MAX. felt just-in-time degree the structural We actuator at from have content the Triumph. Most Mexicali

anticipate we supply our for to temporary medium-term the Note lessen reduction prepare We that, with additional rates. are derisk the higher rate requirements using any impact. chain XXX production and associated to

a contributed annual single-digit has of revenue. historically program percentage our MAX The

X% similar less the We FY expect than income operating of be XXXX sales impact revenue impacts with cash. and to to

Over full performance any other programs for expected on the offset year. MAX impact to is

such, tailwind flight the our ramp-up of situation return at any as A result do As and this we XXXX. a anticipate FY changes a provide not guidance to to time. going will into

years. in XXXX, Wrapping and a and growth the a positive positive on time from generate continue cash will margins QX I'm in Triumph confident and annual for flow up, our maintained QX, EPS, FY to strong three we core momentum first that achieve improved coming free off organic an basis and

on as and create now over structures is execution. we customers focused improve better and resolution and our management and contracts, portfolio we the difficult operational year-over-year strategic financial capital bandwidth have shareholders to Triumph and effective working tight quarter our serve Through quarter. for of value and strength

for With through results that, more us now Jim? will financial quarter. Jim detailed take the

James F. McCabe

Dan, and good morning, Thanks, everyone.

sales, our results quarter our results, expectations. predictability improved first are cash EPS of with evidence and business the net meeting all across Our

I basis. discuss on our and an consolidated performance adjusted unit business will

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

quarter. X% our XXX X, the Net income last $XX about quarter. slide on over and All sales results organic margin first growth Adjusted organic basis On well. X%, prior for up this generated quarter year's quarter. you'll first points basis was from business increased million our was operating as the year units operating find three adjusted consolidated

X% slide prior With respect increased year, primarily FY results on the XXXX growth segment military to Systems in components rotocraft by first segment XX, sales. compared engine driven the organically to sales in our approximately and Integrated quarter

the prior increases Margins $XXX actions. reflected strong platforms. margin restructuring driven to sales year Systems grew prior were year both some million in and consistent by with from quarter. backlog relative for Integrated on commercial Integrated prior higher military quarter OEM Systems and The the year, the the

continued and costs, margin the second reflects also anticipate approximately normal XXXX for restructuring support our points. margin will We FY the which improvement this basis in quarter year into seasonality meaningful progresses, in impacted XXX quarter the business. high-teens. margin first by Integrated margin expansion improvement of These QX the half as Systems this

Turning to slide XX.

sales First approximately quarter due were in for organic structural U.S. and the our accessory repairs X% segment on trading Support Asia. and increased in parts component component up Product repairs to basis

up and favorable year-over-year mix The cost-reduction was Product operating XXX pricing. Support a basis organic benefits, and reflects margin product points improved robust

results new engineering service were were Aerospace programs volume GXXX, sales Structures' organically slide due XX. and X% including up offerings. approximately on certain summarized and Global to Hawk, on increases Segment XXX

of Aerospace as margin EX is Structures and part planned, reduction to GXXX group portfolio transition cost on budget. of of The X% reflects the transformation actions time the programs as our the executing taken shaping the benefits and on operating efforts. we've and

Turning to slide XX.

over quarter first business portfolio the especially Our units. working and Aerospace reflects million Structures the changes $X actions Support in Product was same cost and improvement reduction period program and a our within last management, capital usage our and significant year, cash

deliver commitment. than meeting QX modestly We free cash in and quarter positive confident focused second this positive year, remain flow on anticipate are that cash we objective a that will half. use the of higher and We second cash in our on

inventories million for capital, generate expenditures to $X of liquidations We expected include and first million cash $XX use Working GXXX ramping in $XX in on second $XX were first quarter. cash quarter in the for Integrated reduction the is and increased the advance for half. for capital programs. in million the million Systems program, which Capital working in Structures Aerospace

is On summary Slide of liquidity. and a net our debt XX

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

our compliance with of are covenants. in financial We all

the guidance our a quarter. the aircraft impacts from continue revenue to is of XX FY including anticipated rates transfers to Slide expect billion guidance, of $X.X is Based pending production last program unchanged XXXX, approximately on FY for $X.X XXXX which billion. and we we provided of summary

$X.XX. expectation We to $X.XX for EPS of maintain our adjusted

has and normalized the assumes XX% tax for guidance the partial Our release potential the to to allowance. in year of the reduced valuation due rate QX effective be the

million anticipate use generation are offset the in more of Cash be half. be half soon the We by year to of refunds than year. the received for to first taxes approximately the net $XX cash second in cash

flow to free expect be full X for between We and million. cash the year $XX

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

Slide our detail XX about provides some guidance. cash additional

flow million in $XXX year. advances liquidation $XX growth our the FY XXXX, profitable are to cash and we customer million, operations behind For in FY of cash we of expect to generate of quarter of first ability XXXX confident increasingly which this our includes million With year. $XX from approximately us, core

value. to leverage, that As to profitable we accelerate drive growth we our reduce continue increases core our in shareholder businesses and meaningful will in invest

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

Daniel J. Crowley

relationships, of equipped an organization programs, close Triumph structure Thanks execution. Jim. for employee our talented customer a by base, committed pipeline a and profitable better is Today increasingly defined integrated

results for have QX and our positioned demonstrate that success. Our efforts transformation restructuring Triumph

we the programs As on forward and look through to we move executing our year, strong our backlog. already growing

We compete to and are confident the drive clearer over value and in remain long-term. I a plan guided succeed, Triumph's to strategic ability to creation by

We're take any now happy questions. to

Operator

of officers Instructions] questions open Spingarn company [Operator question Credit the like to time, you have. any with the may Robert first to from this comes would the At Suisse. Our floor that

Audrey Preston

Spingarn. It's Audrey Rob Preston for on

impact in address had And know But so a grounding. all first I just of room from the you the I there want mean here. would I be to MAX elephant heard limited could you that would impact were Boeing, rates to that we've if you be on commentary or suspended from further altogether? Thanks. cut touch the production of any any was some perhaps with production see the if

Daniel J. Crowley

several conducting to down. of that Audrey. has impact a Airbus time. four including so business, because they our in really been MAX impacted continue the on immediate factory The There's XX a deliver interiors us step month build Mexicali a they seven the begin supports of factories the impact just three MAX, platforms factory support that little then at bit Sure. do more severely. months negligible for the because But on not is major Thanks really overall to for the

have that XXX XXX, down as we Boeing no there step below proportionate Boeing Should their ramping, to rate in NOI. including they But that programs. have I do, other XX, revenue indication be would a intend Airbus programs are reduction well which programs our as

us rate the in if able our we're temporary continuing was this there we've full rate to use concerned do to a stock. higher not slowdown. we'd by is But So overproduction that. the chain. That's exactly And several have Certainly flat the the stop, about derisk been reassess at to plants, buffer of doing. to what Boeing spot supply to what at we're replenish asked

So goes term for and short rate very from a impact that us in increase. the the when modest confident back it's that we'll benefit that up we're

James F. McCabe

across in and does diversification even one snippet a program impact impact way. program a strength though it's If to our not markets programs of I could the us the there's to significant speak that

Audrey Preston

could for sale? a quick Great. the then of Thanks. you update progress the Thanks clarity. on give And the structures us

Daniel J. Crowley

Sure.

got As for encouraging that's of months helps. also how want business our performing noted, we've good really you're they and doing you a it's we've headed. working to Whenever three we been potential you're outside XX talk partners, And lot sponsors. where financial about how since looking. and alternatives and of strategic from the see have strategic retrospective both parties well on now in And that months announced interest a a picture this we're we to

MHI, of we're I things we And year eVTOL, and on. is last our And just for award with of mentioned recall, like example and partnership years. continue working extended programs XX win. an franchise Jaunt, we our some the to XXX XXX

quarters. are solid there's So to future we're people through showing in. in a backlog And process. that we the of quickly provide updates working interest very more And business plan

James F. McCabe

pleased past very with think very That's liquidity. I business performance that good that business now, in has stable And Yeah. we're quarter. the this

And positive we're outcomes so, about there.

Daniel J. Crowley

being track we've do of last operations, to three record transitions done we've do program anything divest restructuring some established years, Yeah. If think consolidation. able I and over the non-core

I would look that more announcements in for say, So, regard.

Audrey Preston

again pass All the I’ll on right. the Great and line. quarter, congrats

James F. McCabe

Thank you.

Operator

Our with JPMorgan. comes next Seifman question Seth from

Ben Arnstein

Ben gentlemen. morning, is Seth. good for This on Hey,

James F. McCabe

Good morning.

Daniel J. Crowley

Good morning.

Ben Arnstein

Systems wanted profitability in I to Even restructuring quarter. Integrated after the We're I EBITDA guess XX% just in hone here. margins. the to still at adding on hovering back, in the costs XX%

terms consider to this anything you're operating maybe about structurally there of business has the or that mix for on? Is in the terms us contract changed that

Daniel J. Crowley

we profile, structural margins, QX. confidence and Internally, QX, no our QX, TIS. on we're margin it full there's step but would to maintaining we've that soft no, we're So, be up knew got to quarter going this changes because in year

There us. were in some delays a was really item for pacing that shipment

that products challenge supposed an deliveries. working that by supplier margin being sub higher industry-wide to Some paced are we're ship through. that tier This we're is

like, as capacity. to small and Even try lock well OEMs if items the seals as raw down material, bearings

other And it their sometimes deliver to for suppliers tougher make products.

X our all Triumph on So, either well working to capacity. we've for raw mill been rates of like suppliers And as with bring they ramping the narrow-body materials or X. Tier meet as as and additional at they capacity suppliers ramp-up equipment

We quarters. expect the few over next recovery

And where in in in why were that that slightly the So, we're can the from step confident far down margin not quarters. we year we we know we coming were up QX. prior

James F. McCabe

is for in seasonally it segment this quarter But low Yeah. a particular.

with increase. margin that So will increase volume and will

second improvement I a in quarter. As the the expect meaningful in margin mentioned, we

Ben Arnstein

give can flow that maybe Great, cash sale? excluding up the business structures thank you. And just the free is more, maybe for us, Triumph one you for

James F. McCabe

overall a that positive. the to business handy positive have is to for be million which flow that. So is milestone we haven't But, don't talk the the $X quarter, disclosed for I cash And about.

the of $X in is million free cash after use $X And CapEx. quarter only million

So our meaningful we're to there’s be but each not structures give we'll more you going change core to non-core updating information. a and it quarter,

Ben Arnstein

you. thank Okay,

Operator

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

Caitlyn Dullanty

Hi with the and profile Caitlyn GXXX Dullanty EX on guys. red the you the programs? cash deal remaining unit programs are in cash these for remaining of per what is portfolio? Ron the and This the programs discuss profitability After today. the Can

Daniel J. Crowley

and performance. CAGR Support structures our the clean about fact got very their So in close we're at since growing running Support nicely. programs. Product of XXXX. reason out And in Product been plan We've X% has FY Support very growing red is It's in to Product

approaching the and turnaround times, very growth times performance, at with X seeing their really Show. rate We're customers of good market the quality, partner because additional clean us we're Air

heard You've our about performance. because that's core partnership KLM and Air France of

in resolved Global Bell improving GXXX XXX, now solve on having Embraer problems the demonstrated other structures, and margins QX. really In issues running of XXXX, XXX, to the good cash which the performance operations growth EX,we're GXXX, they XXX, than from a and and out

we those. slowly very smaller business. some about In So And have we're overcome good red feel structures with do we customer Integrated our programs. to our Support, working

is very It financials. a of have price. low program negotiated red may been because Sometimes at

encouraged issue. some a been And as do is there's to and delivery case is quality and always things partnership is as what help program our are as they us key. Sometimes well a But the by side-by-side Triumph or can these. it's I've with addressing customers OEM the

Systems And set this of expect of to be Integrated to by end in as very down year programs we fiscal well. the a small

James McCabe

it's cash and the program. resolved on we're the that with and to still of the program, GXXX on go actually you Caitlin there's very cash cadence transition terms in they're pleased although that time on And budget asked

and we're $XX cash there'll we of there's QX. year. fiscal course fiscal that's $XX before, in And the to be there'll maybe And run on better this in about on next but we of quarter the in and million million that, As mentioned do the trying use always largest be this use year million $XX said out that's program cash cash use for cash of that user.

which little quarter Those using year. it's a $XX in year modestly big the next cash -- is liquidations, the are besides $XX this and drivers of million XXX advance know program that two positive you I other are around segment. a cash million think The

Caitlyn Dullanty

If That's color approach? us this How And strategy Can helpful. switching is Thank approach then aftermarket give would And will approach increase us increase there from able new very different rate? you be you very to your color helpful. on give that you. or carriers carrier MRO overall could you Or some current your your be gears. on capture partnership activities? margin your with to more both? partner will

Daniel J. Crowley

is we a has both, as bit we that call not priority these growth. the content, the in --XX on both and its or afterthought. of have $X.X answer aftermarket aftermarket. of which approached about historically But OEM repair centers Sure. Systems were is And the an margin initial Integrated have. XX% factories that was typically billion line The embedded top OEM it deliveries Triumph

so by Systems they've by initiative, limited backlog, work -- the our one-company Support under our who's turnaround, much quick that are the people now claw MRO died lived Product helping back people lost. And and work new Integrated finding of

sales, spare repair focused but on on not and overhaul. as typically much They've

to expanding us. That's So we're going be to benefit going that.

as needed far was very the interiors Support, big one-off. for as to our as that was come there very it but they wasn't with customers there liked. wait a be broad penetration shift to would customers, to of loyal But transactional. good forward structures, used either repaired. They that I And accessories, is As Product be set

exchangers, the is accessories gear a where So partnerships, entire negotiate going longer-term of really fleet. certain boxes, we heat whether shift towards their structures product, complement it's commodity for of

our more like optimize can And we on so, and us help we line. doing cost it'll our annuity around in and capacity really top have that revenue

we So the already growing almost I CAGR times mentioned. are as at market MRO two

And And market to the to have in I've aftermarket pursue team. can mandate we unaddressed we That's of the our in third-party business of lot future. lot think I'd see the a especially double upside. So a we think we there's Asia. like given

Caitlyn Dullanty

that. quick And follow-up Okay. to one

MRO Or by doing that's work is of that work capture aftermarket are potentially displacing? rate, are your increase shops? themselves? the other Is done you carriers this who As type you

Daniel J. Crowley

the latter. typically It's

ourselves you big in other. and StandardAero then players AAR at look If MRO biggest competitor the is and

from low that spares So to our They don't the they manuals small repair have they've customer relationships, they that but firms But used big growth. bunch companies shop of those target have setup some our on right time. our smaller don't been us our often compete and has may buy of have over they capabilities, through and now, focus a for we create acquire the cost. us That's scale. track record all organic ultimately and

Caitlyn Dullanty

That's you Thank much. it me. for very

Daniel J. Crowley

Thank you.

Operator

question from Myles Our next comes Walton with UBS.

Louis Harold

Good morning guys. Louis Harold on for Myles.

Daniel J. Crowley

Good morning.

James F. McCabe

morning. Good

Louis Harold

just So want the pension. I tackle to

million at -- I million $XX I if this what's So $XX But in at think that think bomb you've the a -- up impact next year. the steps to if few got with think that contribution the we're the the fall in pension how is what seeing $X I that rates to K million to least. that's years, And over -- market?

James F. McCabe

Yes.

be if only So liability. this performance change $X we $XX part million we -- that, our the demand for a don't forecast on that with to two, It's most pension it the over year. or in numbers is on up rates it It the cash fluctuate. a the the will over that the cash has the of to do forecast. our the reduce funding. the gone to the have most year After million doesn't put five-year table next those year or and that's the ramp you're but and And important it's our that can business time, exceed over time next But assumptions right the change. payment Usually, interest firm. implies K for only funding up plan

Louis Harold

advanced XXX pension So year to this actually the sounds still XXX next like year could for down but -- back next be stepping year continuing higher top and is year? liquidation than actually given cash the the the cash of is amount up maybe on of there picking the next

James F. McCabe

with might more combination So this they're sales and with out growth and we've actions The now forecast to now. given year backlog cash we strong $XXX portfolio have cost what had we certainly going million locking margin improve But between sales in our for X% group. improvement you you only this and of year. next growth could right it quarter along cash see and TIS be from our reduction and potential profile are growth think

Louis Harold

just And structures want being follow-up $XX a Okay you the sort pro forma guys being I down great. the I then on that business million to D&A picked to at -- depreciation have of in the up. least guess basis. amortization guided

just not much So quarter. what drove sure in so that up the

James F. McCabe

Yes. It's equipment good life. actually program took observation. sale of for some held service end But and a the at the of out

that So, some wasn't on depreciation that we non-cash took planned.

Louis Harold

the Okay. clarity. Great. Thanks for

James F. McCabe

Thank you.

Operator

comes Our line Jefferies. from next question with Sheila Kahyaoglu Sheila, your is open.

You ask your question. can

Your phone phone the please line? Herbert Ken is comes unmute question Could Canaccord. line you from muted. with next Our

Ken Herbert

morning. good Hi,

Daniel J. Crowley

morning. Good

James F. McCabe

morning. Good

Ken Herbert

could just you walk sort year? puts Jim, growth any guidance you'd know, good just the one I year? rest of quarter? but to organic I specific it just you've headwinds and Or out call of one full the the for in conservatism after quarter. maintained it's Dan through flat the there considering the obviously the only of Is I is wanted ask, first quarter, and mean you have takes organic growth in

Daniel J. Crowley

us delivering years gestation any in and had rates in backlog. that last gone It's example out for order the up We've number a on past GE least in No. really have due is lead of year-over-year. of the at the been the development. XX% couple have programs of An

customers in step-up there and helping a like burn QX. our off on where backlog due that raw big us are past revenue in material with is we So TIS this the problems And availability. expect solve in in

individual or and In some cases, us we suppliers. they the buy source raw material to and from other components under supply buy our that right agreements customers to to

want them in up lot and backlog, with get us going burn partner need past help. we we benefit our QX. to to hey that's so, ramped And and a your say our deliveries And due we

win we deliver So work go have TIS We that out commitments don't margin made. new 'XX. the out to to we've to cash revenue, and and achieve already just for our year have fiscal aspirations in

Ken Herbert

Okay.

it's guidance the it full sounds So the conservatism the and in I year. of half the revenue just some year puts second like guess guidance, based takes upon topline

Daniel J. Crowley

well. and I that's fair think as QX

James F. McCabe

We in to their quarter little and of managers upper outperformance particularly just this year. would our to profitable Yes. want could the bit targets be and second we of half the a hold adjust

call will changes too end -- So, performance be But probably understand topline. it's quarter. this we're the our top any we soon range the first leaning of for towards to the to given we

Ken Herbert

parts fair sort Okay. strategy. MRO aftermarket aftermarket I X%? growth Great. I a of your appreciate components And got know you've And of blended or of all your on incremental it detail total sort to could I the in And if look is as the industry spare at as you assume, overhaul a as that year partnerships term, and MRO if MRO in this beyond and Xx a you're of with place? fair how portfolio pieces industry building or repair this on forward as portfolio there beyond the growth we sort in and and the assumption putting you're the well look But and activity. near

Daniel J. Crowley

almost as That's certainly and aspiration already there mentioned. our we're

We've of a CAGR been Our running year. about X% assessment is X.X%.

facility to it's for XXX tailwind their definitely with entering us. think And we now Thailand the there's important. this that's get why of So, is fleets service some XXX, and is MRO AXXX years, so of and our a into started nice And fleet, growth upside. more like the those

XXX we Thailand different And and XX And did of that operation, from has tours Singapore for customers. I the our hosted in a reps hub XXX been in past, fantastic. We over symposium turnout mentioned -- the big XX was in remarks, different MRO. customers, my this

investments infrastructure their and starting Now Thailand to grow. their are with

rate And is So, we about kind of that we're excited think growth it. achievable.

Ken Herbert

Great. Thank very much. you

Operator

Michael with from comes question next Ciarmoli SunTrust. Our

Jorge Pica

A less the to Jorge you announced MRO the like is quarter. quick of question Good on seems a kind regard targeted focused targeting just month the interiors market. -- carrier on I comment on Congratulations with good profitable aspect partnership morning. Mike. a this This of a that guess business, that the is to it on previous which -- U.S.-based for to

lower exchangers that is things the target interiors? components you're the in profitability versus you that like of kind you of boxes, what maybe heat back highlighted clawing As between percentage this higher-value of terms targeting that mix the are gear volume,

Daniel J. Crowley

Okay.

I'm seeking I business. and interiors. Triumph we expansion as the looked good First Systems not you from interiors. to -- point surprised is of MRO low-tech asked to two find get all, margins work we're I came Point sort when components, That's a most glad one. of out at Integrated was it from because on of I is,

financial And one and we're value our and to we of our on it. looked customers businesses first the investing consolidate have good to holding in separate at at initiatives Atlanta that one into we've And was what haven't down now. and past because interior done performance, four do potentially our we overhaul

but it's of growth within it's albeit, channel, a collaboration not small really Support, Support. Systems Integrated So Product the between Product and the beneficiary

and boxes, the to actuator, core that factories The there our Integrated back pumps And XX on roughly fuel is hydraulics, we have ties gear focus that exchangers. heat Systems.

we and in So little of a of we're keep half the customers like bit of induction reverse they longer little legacy interiors the QX fleet There the our to doing a that going of delay fly year. interiors, expect as in it. second to was

Jorge Pica

And like retired other at the and do significant how platforms, platforms turning lift others. from new about CH-XX, portfolio pretty future vertical the portfolio, are product and mix you How to just a focus specifically, in and programs look the experiencing going defense follow rest these that lineup the shift near And feel looks over focuses that defense be legacy when looked it the being of we transition? you and kind shaping Okay. the trend? on to -- Apache, Hawk term we're of to I focusing Black the

Daniel J. Crowley

very and emerging programs we're on like the call sort like like CH-XX. then programs a V-XX like question and I'll pilot as T-X of the the as now initiatives We're on, ramping freighter; modernization it, the both. and We're legacy programs MQ-XX; well and we're the Yes. on C-XX. That's called on advanced thoughtful trainer;

several supporting of are really future vertical got We've lift. We on there. a teams good content. mix We're

between the and is There legacy the in think I new starts support answer support piece foreign to though both. you've missing sales. is military DoD, which is, got one

both the support think on FMS gap filler Sikorsky Boeing to between calls So that'll aspirations. Defense lot them two. And be of getting we're a from their and a I

Jorge Pica

Great. Thank you.

Daniel J. Crowley

you. Thank

Operator

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

Cai von Rumohr

quarter. Thank and Yes. good you

the bit I cash flow. a more So maybe three questions. little guess, on

you in equal that How kind doing? a $XX your amounts profile is of cash tax term. First, on expect longer year next I for quarter? profile still give lastly, of red. Do to And advances update the And the of the an $XX million sort us for million EX year and this and believe, then of still cash is use? come what's repayments its

James F. McCabe Jr.

Cai. All right. Thanks,

ASTK. to the significant in It's There The we we're is of liquidation will benefit tens that not this programs occur some program year, So us. program using on millions. transitioning that'll core overall the cash structures. program to during the is the inventory transition relative EX, and as

balance considered cash not it's So of with big year. really user this the two net those for a

$XX there'll is a our starts next. only million but forward, in because be this slow, quarter that going the disclosure quarter it a our in year And cash XX-Q, dollars. million not a refund taxes, expectation several On little but up we this had of the

and net So balance quarter cash I the the the will then a be think in year. this balance we over out of had

Daniel J. Crowley

we're down four deliver. And three think up their Cai, EXs left, ASTK capabilities. I or to is ramping to the

see can few months. program next within end our the we of an that on build So

Cai von Rumohr

having result MQ-XX, indicated are has early programs. on that on mentioned losers red smaller on red the pricing or Terrific. be as of then Boeing of that end. the of have you in color future the And kind the you'd the that contract? tough give you're some a programs of T-X, us part the might to But Can you going both you're front are the red be on at which

Daniel J. Crowley

Defense, of perform MQ-XX, on derived. to not They're currency efforts our in to support long what-not Although, controls development how of do crash and compressed know we MQ-XX case periods. and and have highly and a those to fairly new those. is APT with programs Both gear development risk. the hydraulic lots and it's it's Boeing programs content mostly not primary landing large In components to are flight huge

building be we'll So flight first articles few years. early testing and a supporting and the for ground

don't was, a but development of expensive was as, took Global as to successful intensive a platform lot to I led let's that approach view challenging often a and losses. those say, program red which XXXX execute. very Bombardier Ultimately, concurrent So

stabilized mentioned. do So get closely. those My we development. reviews is I weekly are it and on watching you goal ramped-up that programs in to

APT quickly. In we record and the jump the monthly I'll in her her at met is have on and call MQ-XX, the Defense very plan I to any because it case of of calls from the with and and Lavender with wants really she I St. on partnership them appreciate strong. programs -- departures catch Boeing Shelley Louis partnership

we'll work So through we any challenges development have.

an that risk of prototypes APT in early was case which one the the the reduction pre-contract done has first reduce risk. to two help going is flight all I think on award just that of the official overall

nervous -- nervous be to to I'm got paid So not when I'm I've nothing be about.

we So don't I in close the risks program structures. very same past in to seen but think red our stay faced that we these, the we've

Cai von Rumohr

Thanks so much.

Daniel J. Crowley

Cai. you, Thank

Operator

Our Strauss next of David comes from question Barclays.

Kate Kaufman

for on today. Hi, Kaufman David guys. is This Kate

Daniel J. Crowley

morning. Good

James F. McCabe

morning. Good

Kate Kaufman

morning. Good

called sunsetting guide is that And full X% talk guys organic then is this for flat growth? much kind MAX? out driven Aerostructures How to of by programs. you down could you year through Just the for revenue

what down than are the sunsetting of program? much So other I the then that And weighing in kind other is transitioning transitioning programs how guess programs areas growth? there

James F. McCabe

Sure.

stab a at take me that. Let

we've think transitioning I programs the identify to start with.

assembled in you out the wing July. Tulsa if shipped GXXX, the we just last think recall, I from

is volume, that's the a transitioning one So of we're moving to lower so kitting, programs. which

kind February the this be These year. not last year against ones. that of is so have so that transitioned out volume down Other programs year will in terms over this GXXX key year volume of that in time. part ended of out the Global is going so that shipping XXXX comps are the

in unprofitable volume that have was we cash that lost. we that So but we see using reduction obviously volume, we

So of of. is the the for a you'll for when negotiate plan lost cash to flow and the ones reason margin the are part we've positive out enhancement we programs big step lose -- reason we the

Daniel J. Crowley

built There's wing over rates the and a now ramp Global about to couple of of FEW are Navy the the time. and high We first new Trident up variant Navy of of programs Hawk. those also anticipates GXXX that GXXX

a change is mix as there a bit So well. of

Kate Kaufman

further All right. that guess organic think major divestitures, you. do return of Great. And growth could Thank to when AI? you assuming then I no kind

Daniel J. Crowley

they better composites that model. and XXX this making facility structure. close won't extend its maybe those it's not the we the necessarily a benefiting improving already sunsetting I the carry XXX, attempt size a cash that do But two-third are against and our programs net back focus stored guess to where So is assembly and business off-line with helped. business I happy backlog Jim We'd bigger our programs real-time. be that flow if positive that's XXX the you increases you are structures tailwind. but ask business with the the I'll margins. The in give the structural wing the had through making also And performance. financial was a

Kate Kaufman

Thanks. great. That's

Daniel J. Crowley

OEM perform insulation add but to grow well. continues adopting more not to Just original that Recall our interior also overhaul, one and business four interiors and point. panels. infrastructures That's

there that from. to solid we're So going within benefit a piece there's

Kate Kaufman

Okay. Thanks guys. That’s me. it from

Daniel J. Crowley

you. Thank

Operator

Sheila comes next with Kahyaoglu from Jefferies. question Our

Sheila Kahyaoglu

Apologies Jim. for earlier. Dan, morning, Good

Just to question. follow-up on the last

divesting what's you're here? It are drivers and sense and XXX, from a about if for mentioned forecast have profile maybe cash growth do what at talk bit But And you a programs? both decelerating rolling growth can businesses. You bit XXX. talk large about you little more. little makes these off You AXXX, AS. are that How a IS losing could the

Daniel J. Crowley

OEM up again these -- a of new that quantities Systems the might year Integrated Sure. like XLR. from in going of higher of in But that XX is to differently. would from there's bit Airbus Airbus be rumors top little we And doing plus this products. versions We're programs is year that the last stepping XX AXXX rate family and quantities our on benefit the rates are one in the is

the next will So longer-range we're version that enable gen of content that for AXXX. competing version

F-XX from roughly coming We're Martin. content. We're on month also rate Lockheed a increasing new we're from stepping nine Embraer, is programs benefiting of that the our is That ramp -- sunsetting, although AXXX. still that the out Boeing, Gulfstream, are AXXX up

ago, rates platforms one. month, were of really XXX, as diversification the with program important. less a this with have high is as a earlier, Three been seven overexposed mentioned Jim historically now than as profitable So, which we years it's and

my as a on more similarly mentioned XXX we I've So, content. structures content in exposed. to And us. remarks, don't want systems high for It's not be is

to continue to going we're the diversify So base.

We're source we the about quarter, as that's be going lot spending the time example. In a rotorcraft our vertical future for of earlier wins question lift, going with of Cessna an a the business, growth with had to to Sikorsky, expand us. so

diversity So, coming say I out Asia. from of customers that's diversity geographic would then comes growth of platforms, of more diversity is and with the theme

Sheila Kahyaoglu

for the just change the divested some to on related remarks all? given this structures you at MRO color. market And overall, you've aftermarket does prepared then your Thank your programs, strategy

Daniel J. Crowley

The use customers Concurrent wing given don't since profile. I to two sell -- an think I'll awards it high were Bombardier No, as from the decision Bombardier. Bombardier, with was so. the we program example, to

sold there the and award break was business. Fabrication in a from no But, growing that one MRO since those was One us and precluded was platforms. an on award, relationships we fabrication customer

with but do the have they GXXX, And of their themselves. GXXX, we Gulfstream on GXXX, We GXXX. aftermarket on discussions any aftermarket are content lot a don't really in

support So, like more already that in is and growth to and commercial business FedEx be going aftermarket our from the I the customers UPS. OEM think carriers, expanding with

it largest the Memphis time. like weeks closed ago, way about it. the in excited they a interiors what operates like I effort. and them, we I'm a very we components aircraft support channels beside U.S., our their and do. was on structures in to fleet And other Triumph's about few management better do that MRO talking can They do under and can based turnaround effective And they in FedEx performance.

the from from carrier programs less fleet. more the in divested structures say I'd So, we

Sheila Kahyaoglu

Great. Thank you.

Daniel J. Crowley

you. Thank

Operator

from Our Ciarmoli question next with Michael, line open. is a your follow-up Michael question is SunTrust.

You ask question. can your

Michael Ciarmoli

Yeah.

tailwinds you the talk military going several the providers of the positioning and mentioned environment what those to whole? term, near on as like several several would one are you competitors locations. and It military -- them a seems about to UAE in viewer placing FMS. one Just that contracts I it's other kind turnkey for and One-stop-type Can you question be MRO say There’re to with of outperform follow-up countries. medium-term. will Bahrain in themselves as or MRO

Daniel J. Crowley

platform, that got Yeah. And when is approach we're the X. reversers. influence very the good much and Tier same you markets. think to a niches you as the on at. Where more control support. over have those we've Triumph selling its up Either X, don't or used thrust do I will be as setting that our I Tier focus turnkey one I'll into

know we Thrust it reversers, We well. provide and overall them. provider assess we're tailored to in leading and bring we the on them, do how world induct them We the in. repairs. We

hand And that used are parts some and its parts. things reused on we rotable from sometimes inventories, new

those and come to But, because and we will quick do fast, ask us turn. carriers on us to supply it well

like in companies partner Services. Boeing with to but also sell going we'll Global So we're niches, our continue to

are met at market, there's the We list market. with us the as a asked. including subsystems unsolved and robust asked which military components what globally gave we MRO you of them them for problems not MRO And they a and in airshow, the several

Does we of And do opposed to today. we'll value demand customers, say, to to those areas to what that So really set don't we're going more be in hit we're as one-stop capability into think going focus going niches by question? that's and expanding our on your shop. our I your offer doing well.

Michael Ciarmoli

it you. hits Thank square That overhead.

Daniel J. Crowley

Thanks. Okay. Great.

Operator

questions and I'd for all we Ladies turn today. closing. Dan time back for call have like to to is gentlemen, you. over the the Thank this

Daniel J. Crowley

call. benefits our in we've starting work year a to again strong done three the see and for FY XXXX, years. restructuring last the all to the We're of thanks supporting committed Well, for

to stayed we us, coming And the new all the I appreciate delivering last the Thanks. in over that us have that quarters. joined the them And investors forward year. with and ones look on

Operator

and you Standard at conference. dial code XXX today's you. and access All an Time, Eastern X enter August XXXXXXX. access and can starting Eastern concluding is going access disconnect. that’s, Time. to an at replay may There enter replay, conference PM the Thank XXXXXXX. Thank XX:XX XXX-XXXX now XXX-XXX-XXXX you code in today be To Standard Again audio XXXX AM sorry for -- today's all an of on parties XX:XX participating

Triumph (TGI) 31 Jul 192020 Q1 Earnings call transcript