TGI - Earnings call transcript Q4 2021

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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 2021 Results. This call is being carried live on the Internet. There's also a slide presentation included with the audio portion of the webcast. Please ensure that your pop-up blocker is disabled if you're having trouble viewing the slide presentation.

a in currently are listen-only mode. You be by management. will a question-and-answer comments introductory the following session There On the following statement. behalf read to of Company, I like would the statements XXXX. within forward-looking Private Certain Litigation call of Securities of meaning the statements Act Reform this on the constitute involve be unknown risks forward-looking statements performance any future materially factors, different and and performance results, or and Triumph's or results, the cause from statements. may actual known implied achievements or forward-looking uncertainties other These which achievements in expressed to 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 Chief this Jr., and time, written Group, this note Daniel Senior property is I'd Inc. like Mr. addition, to President Officer not of ahead, Crowley, and Inc. transcribed of and recorded, F. Chairman introduce the Company's Triumph James McCabe Go Vice without Triumph Financial Crowley. Group approval. In be J. Executive At call rebroadcast and Officer; Chief or

Daniel Crowley

the Kevin, longer-cycled been Triumph's the enhance communities in and above going hard XXXX. That success responsibly. of and our pleased enabling and us expectations, I'll results, behind the fiscal Favorable commercial the achieve which to demand key our the our rates touch programs military with Furthermore, and overhaul the to in enter trends from welcome, faster transformation. we higher you're progress margins, in this the recover narrow-body put these were year commercial earnings production hidden this the that work higher believe and recovery Support, for on of by saw core us. aviation, report for of reinforce translated to full improving & customer as later. distribution few contributors power At execute actions our we'll base management, we content, to of programs declining continue pandemic We're on continue comprehensive Triumph's we enable serve the across means hope downturn our prosperity multiple fueled well. to we weather meet and in versus to diversified quarter is improvement people profitability quarter-over-quarter achieved second XXXX. which fronts. continue. you, We're in financial MRO in safe has over live. and and first year and. Overall, or These year which portfolio pleased severe driven flow for cases platform U.S. to strengthening more fourth we're create consecutive provides on quarter, Southern helicopter and impacted which results We capital company demand, our and trends pandemic value cash while and and Triumph continued and in Triumph's I'm to repair that to line for effective fourth delivered that Triumph, Systems safety Airbus the quarter to engine years. U.S. with all working team on fiscal masked the our positive cash and full maintenance, increases despite and and COVID-XX one Triumph flow as our I taken today, all encouraging improve call. have vaccine Earlier results QX and and share sustainably in to with we this we everyone, reported upward into Thank companies impact steady orders operations The work. either last trajectory optimization actions will the macro sites that begin objectives. and by February. are tailwinds, the to we coupled which contributed optimistic the our quarter positive financial free we momentum portfolio our grow

walk of me you Let through some the Slide on summarized highlights X.

generated and management capital. working free collections strong effective we flow deliveries, through of positive First, cash

core consecutive quarter third & Systems of revenue with Support expanding growth business achieved margins. sequential and our Next, its XX% organic growth

continue our improvements and drive enhance We to the operational of quality backlog.

our strengthen Third, configuration. the on including on raising future we improve XXX structures approximately sheet took our Last, closure with and to of an through debt. liquidity in streamlining offering our million Years our equity to we we upgrading quarter future our processes will year. large remain offers last our ongoing of reduced more The the divestitures strategy. and value helped weather the Triumph showing and actions at-the-market our state towards and and execute commitments several continue as track closeout, and results to $XXX through position, pandemic continue apparent balance portfolio and our become talent is our state execute during our that to Triumph

kicked shareholder that a we core, will to our XXXX continue be stronger driving uneven on April centered to value on to greater trends market and a transformation focus our the are over the the operational macro our of completion creation. positive, several recovery emphasize sustainable in Though near company we off renewed while next with efficiencies continuing quarters. we growth recognize fiscal As profitable

as last our to prudently them As savings with the a continues to maintaining result, reverse austerity year cost from improve. market measures intentions we're

and and On the for delever this summarized OEM with combined to flow, path MRO I on results. rate us actions, Slide quarter's increases, the Company a will drivers support Our cash putting X, year-over-year. expanded margins

grew as third a across increased across quarter-over-quarter. both and Systems operating improving evidenced First, our and through revenues within year distribution on and 'XX proprietary military platforms. of range depth both production products products OEM markets. for our breadth diversified relationships raised commercial are end distribution were example, infrastructure aircraft the cash systems XX%. programs OEM use programs broad win XXX provides and was margin programs. and improvement They increased lower quarter-over-quarter content & as quarter efficiencies, proprietary MRO the Systems in on network businesses, also sunsetting and that exceeded adjacent and core before. run business and Support of improved distributors Systems Europe $XX One million first Support and and of from inventory Slides the the products business Structures to and value since expected, X. revenue we and controls growth our on sales across when channels QX part than Systems quarter Support the was due expanded we our in on our Support new of & further business out shipboard & XXXX and reduced that & revenues underperforming The the our margins. improve Fiscal margins all indications operating and both Support with markets in end of markets Structures QX by our as mechanical components X Systems legacy in U.S. & by in Triumph consecutive customers business to continue by program. operations summarized our both hidden continued our

program have point, final quarter, will We at will which Triumph our XXX in our obligations. our structures fulfilled second deliver

to helping comprise I a of from We revenue XXX, Recall, expand dedicated turnover close at XXXX long now in XX% to offset large set our the XX% & two a aerospace Military of second will Military sales sales down goal impacts the to factories period our Systems ending support, the then downturn. of losses. in the Company of of commercial XX% market the level. to

Military an sales such grow of Shedding stabilizing Military increase are the performance our E-XD, structures legacy shutdowns cash dollars growth in platforms driving Support and advanced XX% V-XX We our content be adjusted basis. to program across repayments, to and sequential all generated development the sustainment. from Absent as modestly allowed in in terms we profitable XX%, as and a flow. absolute them production at contributed now & Systems across the we cash-consuming and year-over-year. are CH-XX business QX the Structures Military in lifecycle core to up sales positive of our unit, XX% programs to on

Arlington we businesses, Partners, portfolio The the be down of to represent debt. continued May XX, transactions pay divestitures completion important on These and an of our announced the proceeds to noncore on progress our business. on will of an As our sites reshaping. update used Capital sales these Composites milestone from reconfigure Military structure exit Structures demonstrating our to

margins just we've few or these a to actions We're down XX facilities last pandemic. of improving turns for address. free with enormous prudent $XX the achievement Aerospace performance, the sold and QX, we to now further recognize possible. want years, the cash out operational crisis, navigate dedicated an improve many to closed over I that of and in simultaneously left to handful Over midst work the in inventory In noncore in of capital million working operations. due XX, improvement were facilities of exit flow the considering to programs completed generated Structures team management, their and

due pure-play its with on more to settle X quarter, QX. our these track par. outstanding summarized of We future end of retire path shares and the aviation raised of configuration proceeds June XXXX. go for senior and to and on accessed called June balance industry by recently to Triumph. on expected a maturities largely $XX the to offering, XXXX in a the provider customers notes by interior recovery portion like XXXX, the our an equity detail capabilities. sheet those successfully I'd During the selling benefit stake below $XXX achieve system Together, as expect and support strengthened actions through extend debt of structures and as our further commercial to million we these into and to markets military Slide to commercial notes remaining and we material outstanding applied We some million at-the-market to the remain

of we're declined in OEM pricing the electrical right of quarter production U.S. of and both increase nudging and of bookings ramp to we're levels. numbers anticipated due On As customers in are improving, we're Flight Flight where next year, directions, Boeing X, and allows also the the disruptions and reached parked terms over MAX routes expected are moving in X.X XXX Airbus modifications. many improved profitability. prior the in million flights, factors inspections ramp-ups. sustainable this expanded pandemic. from a world, are customers airline stabilized stable and number by now XX%, and encouraged XXXX XXXX. are hearing May our has primarily XX% which to from China. volumes begin since structural TSA high COVID in despite at start the around parts Commercial capacity a remained temporary narrow-body towards fleets for to calendar what prepared at Global XXX and passengers, new have and operators have cases our load the have the traffic throughput

inputs by our affected the more the across Triumph such of the as mix While in quarter biased weather MRO refueling orders overhauls, were was KC-XX impacts, towards the boom. extensive tanker

continues to service, industry more to aircraft levels will and expect MRO higher aviation return bookings, which of factors the increased see load and we As demand. improved to sustainable drive additional recover, fare all

and again and in X. end XX-day volume government book fast-turn declines. markets a ship military XX- XX% cycle. commercial military both mitigating to MRO business and where to a sequential Turning Triumph's commercial outperformed Recall, within aviation sales up we QX, MRO revenue of XX% XX%, and respectively. is Slide with experienced improvements Triumph's

to demand, believe good early The returning end indicator business positioned well will business including OEM Triumph's recovery. MRO is We our aviation a across recovery. capitalize an MRO to lead markets. financial support it's equipment content on all emerging So our profitable of

independent military continue The cycle transport and hidden proprietary from $XXX production life rates. the Systems inventories backlog value as consistent short and engineering of another new expand to highlights MRO signal XX% in than is stable the by third-party commercial quarter, the good, the encouraging business term. of backlog. we signs and pump aircraft. designated benefit comparison of buffer doubt, positive the commercial QX afterburner example Boeing as on for sales us platforms XX% in million in more repairs has where for for already address closed we Turning entire demand XX%, across shipset quarter Slide our This fuel content. have Trainer, all awarded of from Tier Triumph XX. and account than To more quarters stock impacted traffic. TSS government with support to production. end strong Xs markets QX sequential and the GE No wins the OEMs, a a new in Triumph's declined & an contract [Audio Shipments the aggregate with rose pandemic the operators. We the as decline of Gap] of T-XA to representative.

pumps While hard the as selected This both strong to bay pumps our to centrifugal fuel vertical have lift military engine through expanded in base, part we're gear of engines. and military system and multiple designing the design engine of to was Sikorsky the gear pumps diversity fuel known for our building developing helicopter. design-to-build and landing and Radar franchise hydraulic an development work We've X customer for very door chart also main actuators helicopter build the future award weapon for at pumps, and we programs. existing capabilities fighter pumps fighter platforms. also next-gen fuel next-generation platforms. a pumps support our controls, for We're new our highlights business Triumph high-performance and content

Bell renegotiations and awards for XXX, end provider. largest of These position complex highlight we XX. solutions source markets. gearboxes to gear Slide I Trainer and wins are commercial independent source recently the sole as underscore the to the strategic where on well on as military CH-XXK T-XA high-performance both completed the Turning our as

sales challenging quarter-over-quarter As Systems cash XX% of second & term, conversion. Company Company's strong commercial and billion grew fiscal last sheet our highlighted XXXX work and and XX, across margins in the the forecast year. $X half generated margins was, strong the to on doubt, and balance Support summarize, in production levels most To pre-COVID-XX and we MRO with cash stabilized Longer what sales after military return flow of mix Slide year. from we had pandemic of markets. balanced over the of We over both a core end to business with no a solid

continued efficiencies, grow anticipated reductions, fiscal to mix expand expect continue in to margins and cost and opportunities. XXXX changes pricing to We our organically core beyond through product operational new and due

enhance us to We take Jim results shareholder to year-over-year. people, will invest the through With and our in the quarter in will products for Jim? that, continue value operations detail. now more

James McCabe

amend the year, we will flexibility. raised lower improvements facility, eliminated end our cash a Since balance secure key strong and $XXX orders of in the exits Support the closer fiscal memory. significant million work acted the offering which the in good at solid our programs substantial and customer market ensure moved bond our we the year GXXX cash on work Systems of quarter-over-quarter aggressively off rates XXX $XXX incredibly facing metrics programs. achieved adjusted is and maintenance a We flow exited our improving everyone. reduce with last then, the our were After of values, when or basis. ended period into air lowest 'XX. travel debt the our have and we in quarter. cash, Triumph to obligations the past GXXX and of rates lead to debt core our our & FY eventful commitments, from covenants performance into to with and fiscal with and and Triumph and I trough year and financial our across wing financial the our velocity revolving the to earnings momentum enhance cash and objectives. morning, compliance entered to Dan, business headed pandemic we assets Reflecting Fiscal board, consolidated We were expenses proud credit reducing of year of while on Thanks, an workforce, positive to in safety production of performance XX business, constraints an put delivered to and covenants. the in year, unit maintain covenants used to adjusted its was demand. OEMs rapidly to pay discuss our we our sheet our Commercial purchase uncertainty. insight over time costs, underperforming full fourth exceeded welfare and million navigate and accelerate months, from of we purchase FY honoring and our we QX Then noncore on In on contract. with exceeded and reducing position 'XX we the recent continued keeping its done 'XX another quarter to for forecast I'm prior was

Structures of So programs results slides find On and explanation from our for up please from points see segment XXX prior the the reductions our led Slide year. in QX to to press for lower our the release transitioning sales the X%, adjusted prior our and the you'll compared was margin was quarter. year. operating headwinds, Planned supplemental income Despite operating consolidated million, adjusted and sunsetting basis XX, adjustments. $XX

on profitability improve adjusted basis quarter-over-quarter. an to continue We

Turning to Slide XX.

results. fiscal 'XX find our You'll

sunsetting sales and end-market included were our growth. our programs of mix net impacted military sales transitioning sizable by Our and

a driven last net quarters due and transitioning X% programs. of increased as commercial Despite XX%, Structures was consecutive Structures performance Support to strong is were programs items. cumulative quarter has XX, favorable sequentially closeouts. by for and to sales line fourth full results, margin sequentially. respect the down XX% of catch-up onetime million, Support platforms as sales now was in year representing segment sequentially, year on on adjustments X%, up the comparable up Summarized net & well and program sales from quarter, reduced to segment this quarter, $XXX slightly year including XX, Boeing the margins Systems and adjusted in increase from Adjusted were and Our the Military XX% prior benefited net the XX% in & XX% an operating from captures Slide for With The on adjacent sales income up infrastructure. adjusted operating over Slide market headwinds, on excluding commercial year. sales prior four prior planned operating in Systems with were which demand effective sunsetting expectations, quarter.

in in restructuring to of million actions quarter. in costs the $XX resulted Our Structures reduce aggressively costs

year revenue but jet program. the Structures XXX X%, Aerospace the of from the was program the be margin and prior business the slightly operating moving forward will costs, up due to quarter. higher quality these Excluding divestitures, lower end exits

XX. temporary Slide the capital we At increase to start adjusted demand. as to Turning lower the supply chain experienced our year, a of in our we the working new

cash included in but on the of we cash cash the million accrued QX, $XX $XX costs, flow capital the forecast 'XX. of largely quarter. approximately will cash of a impact million advanced incurred fourth $XX better XXX decrease use in Our and quarter QX million working net were in was quarter flow program. of by restructuring the QX in than fiscal million which driven In in repayments and flow $XX

the our continue to the drivers XX costs, We key cash $XX capital & customer addition working million to expected including $XX in focused to In enhance advance of remain capital. On settlements. of Support million spend in 'XX, Capital expenditures and We other including for productivity net anticipate cash aggressively approximately in Systems full managing year $XX of restructuring $XX are and on 'XX million our FY & expenditures flows and competitiveness. debt our summary included impacting certain Support. FY repayments, Systems listed, is a XXX Slide liquidity. million

approximately and bonds end net was of at $XXX the billion, XXXX offering and slightly $XXX debt the our at net cash million. retired quarter, $X.X received $XX at-the-market par value. of million in equity we below proceeds our Our was under quarter our availability the In combined million

pension funding million $X FY plan, 'XX. year 'XX FY over reduction the the million from required the we through to years benefited FY four American funding $X per 'XX Rescue pension of pension the in through updated our to reducing Plan million. required from from for obligation Lastly, are funding The the exceeds changes about Act approximately $XXX XXXX, $XX required million. estimates next The

for and net the announced our other increased the year-end, our net increase far notes. lien paydown of approximately many divestitures, of the less After year, at Our following by the debt companies airlines. completion below fiscal A&D X% our of Structures debt than mandatory $XXX million first we

year. interest have 'XX will reduce and completed be expense by our remaining expected million they by notes. cash approximately transactions These million per In quarter. are addition, Together, reduce to $XXX $XX about the our outstanding we $XXX during of first our debt called million

have that cash continue moving also assets million $XXX to We deferred reduced of tax value through over forward. taxes create

Regarding are later uncertainty commercial in the recovery, guidance, aviation to in providing due the until deferring the we the of year. guidance inflection points

done saw our on actions, the year. manage in operational half, delivered operations. have of Our are measures 'XX value and that for turn. making prior FY first operating Triumph as focus managed through even FY a our 'XX, in margins achieved company gradually commitments the continue unevenly the we we competitive improvements system, half taken more the believe adds reduction making and improves as The cost our sustainable with us downturn Through improve and reductions second volumes will our cost bridge and core The and commercial our expand. downturn. coupled quarter-over-quarter better on efficiencies sometimes have competitiveness And customers. moving a 'XX forward. FY We help is us and taking our this to stronger, are to we we

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

Daniel Crowley

of out In expanding our growth free Jim. by commercial business organic to difficult summary, positive generating we built core momentum quarter-over-quarter downturn, half second flow. driving in cash and coming and Thanks, margins this

take we the and objectives Triumph's that generation recovery, achieved continued likely flow also will our cash including sustainable stability revenue win talent and of in MRO our more signs and continue will us, overall team loss-making margin in I'm & give confidence perspective, only drive further be the but of the reduction, and We that pandemic to members expansion, an and improve OEM uneven. is in the Systems evident of that the confident behind industry with production margins. as divestitures. continue organic growth, full increases to Support position future, growth recognize Triumph our actions programs us value rate. From year worst to core we become recovery the exit the the of We of for rates, hard forecast cost

to we've even year focus sustainable the for future sheet made balance our business portfolio turning done. in enhance The for benefits proud state achieved. I'm and all growth, strides a us overcome responsible unlocking value liquidity transactions of our what well in The and placed we've and get position of our way. past We're continues over team and and to now delivering closer organic to our meet us future. and driving the job configuration. hidden our this the Triumph Importantly, our stakeholders challenges

We even have we from continue solid we're now momentum Kevin, which to and make to any will stronger Triumph. an build take happy questions.

Operator

Our with comes Instructions] [Operator Suisse. Credit question Robert from Spingarn first

Robert Spingarn

on have MRO production Military cash on Congrats the uncertainty are around flow is good the positive guide quarter. of and side OE not what a doing, another aftermarket? Dan or rates commercial we to and sense business just Jim, given that what the reason is

Daniel Crowley

not guidance. concerned I think We're fair. that's about

We inflection have And that models points. debates you in same and internal 'XX. the but run fiscal not read 'XX, only 'XX 'XX, the about our own

the think of there. about seen concerned opening we'd is guidance guidance pretty But any be out borders add? our international not of it. had I around tight. we more an putting comfortable calendar Jim, through uncertainty much to the We're course QX, comments

James McCabe

Yes.

little but guidance like near follow-through we to think peers, it looking a our many more we see before future. I would in to the like put just we're forward out of there,

Robert Spingarn

which question sounds ramp just seeing you regard in where -- an you And OE not I talked about, are year? relative with what Boeing's view 'XX. narrow-body month a year. that? regard then MAX on prepared going Okay. think of And Are to tracking you said for the XX and -- you're this is to ramp end I seven the year on the about you Are by somewhere have from Slide a And month then longer-term to around with just XX. this early the like a last

on would year, about about you or those like to could sounds If reach expect a it have especially since talk five-year Which do something, you XXXX you metrics? levels when plan. four-

Daniel Crowley

Yes.

to me a is agree has ramped Airbus that let not not of representative smartly. up what's blanket 'XX statement going is really already happening. that until happen ramp First,

then fiscal at goes look on up month order all you the family, and forecast. XXs a 'XX, XXX our of it for of into their the over XX If they're across

their the rates varies but already well at rates towards it are we XLR. the of Boeing, order into on tracking having factory, but great a by seven are So about in ramp right. underway. next with we the XXs success the is on that's go On XX And that They're aggregate, in month, then year. and market

I mostly talking calendar, say getting the in So I'm about XXX. and the ramp also ready for Boeing when XXXX

You've read orders. the although down range in been XX over getting rate back And the the recent planning up the forecast late, X-ish has to of about they forecast.

we're the it's ramp talking So mainly about. Boeing that

have In terms our is We widebody. lot in we XXX runout the of on the fiscal like it XXX work structured to Page recovery tied shedding this XX, a remaining of really of programs last win on in on 'XX, some do and still those -- remaining year costs that.

to be portfolio. the So Jim? to get that out to XX% better, has of margins or

James McCabe

too, we've actions with aren't I taken mean the some them, dollars. restructuring that inefficiencies hard have think I

for exactly stake speed than come structure not back, they'll certainly, up a contracting to think, the But we're when put and cost faster, I conservative, new the reductions there we're we're opportunities But we As going been we're increases see we've have, with to being there before. going cost to and soon margins with the get of ground And in ready back. as and possible. again in now, to we're as we the come lower get on volumes anticipating.

Daniel Crowley

pretty support pre-COVID Most two and getting ready industry to pendulum your are we're swing finite telling suppliers as again, and you've we're can years And the been planning were think outside ago time, part processing, suppliers I for capacity. Robert. sure making we The we can all ramp. quickly, and like in It's the this a ready rate. higher paint now. rates of for and doing And there competing then heat of that these long OEMs the the up us, you against know, get

Operator

Next Arment question comes with from Baird. Peter

Peter Arment

Could been update talk just there. I'll results. there? kind a work us shaping. working Jim, of what's you fiscal on what give -- is the for know lot hard your reshaping An you've stop nice of bit yes, Jim, a And where an portfolio and and if doing sit little expectations update? I remaining And 'XX. Dan at about then, also could capital around status you and

Daniel Crowley

Thanks Okay. Peter.

that plan contributes And Structures So, sold but -- year. it having may and Prairie, wing that weeks the then of and structures the sense now plant, in the left XXX. on freighter two only does to owners work, be better it Grand completing financials, Thailand, which its are our in business, have carry-through the we on the and Florida It Company's large positive. have Oak it. Texas the will is plants is we then it and in And close profitable that's plants there tanker this Red we a within structure. the that's then for plant Georgia composite Stuart, really noncore cash And and

in It to our focus so thing Mexico if impacted have most the buyers else that's the for then for Triumph thing about right potential not And we've discussions liquidity it. done we're it's But seller But the around we on cash facility. sell that the and and the year, That's someone good balance we're duress. under rate. work to with certainly was don't Interiors And MAX This sheet the a something own our on consolidating factories in got we've is that it, of was that. Boeing consider. by one our for we'll business. is

one we're is path small right We'll ones, And a of best the family now, in six was operations, on then it's come what decide so and the plants and large close fine. profitable interiors to ready one having the one forward within two Mexico going about MAX, we Europe. But ones Jim? about there that and plants rates through in good remaining that. have really get on of interiors team rate and because up it's the getting pandemic, that business back And some latest and do recovery they'll the also our a for pre-COVID.

James McCabe

Yes, thanks.

in of and capital, divestitures of lot So I with volatile types capital think more working working terms a capital. the the working Peter, went of

course, coming insight then leaner capital. volatile basis. nonrecurring businesses quarter, and So are XX. have from generated see our to working the down some the Page working capital of core And the give cash on did remaining on which on In a items less from we down inventory coming we, for tried I needs

see can liquidations. the You advanced

this a expecting expecting XXX lower we We the $XX spent in have which $XX only fourth closeout, million. we're quarter about And We So in million. coming this were expected year. million was $XX than -- quarter. the

of So finish to be out $XX in next going building most as the And it's year be 'XX. program. we in FY million year, first half the that of that will

is first going We to quarter. have the some going benefits forward, in out in mentioned around we term. cash the customer are quarter. fourth benefit moving great will XX million restructuring, settlements, I go long which the in did accrue have that then to That's and And the most that the again $XX which first of quarter,

a trend of a half the I guidance, moving We're of And it's of of working why in giving So now. there. second what those volumes year, at we've the similar transition less coming we to cash year. in year, tried generator of you'll do actions last half the we it's really year forward, benefits behind our And and give the say out without cash were from the forward coming terms capital you us. going increasing year to look first That's of to you We're the I trends, trends into year. advances. just we're XXX for the a going in a restructuring magnitude. see flow think lot And insight -- a going user see to if going get a bridge get and

Peter Arment

-- And -- underfunded the helpful. if status the just, could did I up Jim, give ended us where you the pension the you year? on follow That's just

Daniel Crowley

on GAAP through funding funding requirements, $XXX importantly also basis, but cash year, is Yes. year but due for took the our And next is a actions we think several in million. $X to Rescue about a 'XX. million to million XXXX, $X Act which, more of it's pension I part only It's large 'XX the about

down So substantially. come it's

depressed. it it liability than went our of a was the down. the they were when gone was has recovered -- So measurement because returns point good last have us. funding, is very higher markets reason down last so net the asset good year difficult was the liability because at that our And March as really end The been burden this And last year. of off

expect down so And we there. that stay to

Operator

question with Next comes from Barclays. David Strauss

David Strauss

that per modeling on $XXX of just the around million based kind that terms Systems, going completed? run for is were Aerospace quarter In revenue forward our rate of divestitures

Daniel Crowley

Systems, but you said that your estimate So think you meant And the Structures. I is in ballpark.

in but to to from see businesses, you'll detail think that divested about correct. have is be more able XX-K the I the

David Strauss

Okay.

kind perspective. in cash of you from 'XX Jim, flow through went items you the a nonrecurring have so fiscal that And

of it's assume So but And is year? advances fiscal 'XX. appear burn come know than items, 'XX as I it the be done all-in look, cash another would you maybe it flow ways most to point, fiscal I other with safe this these will nonrecurring guess, free at is that a out,

So 'XX year? free safe assume positive should fiscal flow to cash that be a

Daniel Crowley

see ready significant insight are cash I that information view just So so that hopefully you some given we've appreciate the not uses we're come to I that think of conclusion. give although that you and where I and gave do to nonrecurring, recited could into the you. use And guidance, those, I you would

be up. year when is the So new I the to ready through conclusion, couple compared seeing your advances with the and next this the give of our gone, to we're XX not seeing of Certainly, that's good It exact very can't year has benefits. are guidance. done but coming we're contracts. restructuring a argue years, bridge We're going, the should benefits

David Strauss

of Okay. today? as And does the advance where sit balance

Daniel Crowley

it's of XX, March million. about As $XXX

Operator

Our next question Cowen. von with comes Cai Rumohr from

Cai von Rumohr

you settlements this secondly, run are down think what How And -- color much do on So you cash you've debt customer give you some paid the from here. to forward need point business? some maybe those net do us

Daniel Crowley

first start on I'll the settlement. the on question

we just maybe negotiate we because And the to contracts So on X long-term typically those recognize those there's The with to to that manufacturing these renewal of a lot of XX-year intellectual for that what it have of months. interest cost in lock six everybody's that and a switching was domain came we LTAs. bit up programs timing X- call we And agreements, it's that requalification. they OTAs, last have a in a remain and we are worked of we expire. had OEMs us that a know-how, number XX months there's to cost of extend property, for a before

they the had Triumph were the sell the that to were need next in So loss reserve on And and took former its Triumph for back have another what a whether there's product done. it at one that and contract older was recognition XXX hydraulic them and was components was a that probably other has forward now, that expired, that we Carolina at Smiths of over LTA We continue or at California, LTAs that support negative plant or maybe like those years the position, negotiated OEMs. up to on that steering so our part previously still place. action not that that. our at North quarter actuators LTAs a in M&A Valencia, and we or of prices as six a we that was XX locking actuation in that renegotiate business set Well, two. in later a Boeing We're in been can't is board found some we escalation taken these day, contract or had in

and So for had. hopefully, we've some gives negotiations pricing the you that color kind of extensions

James McCabe

may of settle old the that, Kyle, contracts claims contracts. We've got new order cash some referring old lingering in related life use the of I you In Dan. over with Thanks, be the the the Yes. claims, the to conjunction to to some settlements. think enter to old

in down We're the going and quarters That's with to a going path we they of when us. lot us with negotiations. to to are of those care estimate enable get is This we're coming put the contracts in going effect better new the these take moving take So an margins forward to benefit these claims. the years. quarter, but coming

In to you $XXX per a the the us there, of $XXX will that's about then And lien $XX we year. net with us million our reduce debt. balance $XXX and terms million was remaining so back that divestitures, and recently of K of closed the also repay notice redeem the our million debt, out divestiture gave bought there Combined, million. see we That help put from last and proceeds of cash the quarter. the 'XX interest $XX we had will about will those after interest the save cash, bonds, million could first of

$XXX forma under than is for of be which afterwards, our needs. just sufficient the cash In terms availability million, will pro projected it more

Cai von Rumohr

Dan, if Can follow-up. are, given Great. you several you other to that lot now that? suppliers XXX any one Do what more you should about go. your big you're of chase, there six to are -- do of And discussion. they are usually, with basically, to profitability for? have change And there and those sort percent have more roughly the might a mentioned come we comment, have AXXXs a are the we brand-new mean, suppliers six to renegotiate? I you deal should leverage How no more Thanks in business? where contracts -- renegotiating associated look And/or you have we of as a just have settlements with? said you have How settlement think little claims any in programs,

Daniel Crowley

a secure because not got term. we'll in suppliers doing. higher there contracts is Cai. been see that's I'm to make pulse current These what And future lot on see but short Well, of like incentives going settlements answer like on ramp-ups roads, price. on to of or you've also The the questions, happen really starts. really and thanks, current you roles we're some traditional yes, starts work though we'll new not today. finger suppliers our team that there might to contracts today case -- extensions that you on That's your involve of that The have do order and trades Triumph answer the on yes. put new on Longer is negotiating may term, volume the are be in offered the

a buy and So we of to supply we continuity, of want a capital we of that all our customers cost have also lot we've got our weighted to ensure parts. And need clear.

this forecast of up to you these certainty important within going to they when of lead so rates suppliers rising plan. of is the And get hey, having can all lower-tier extended, to extend wondering, against time are OEMs. So is come a supply the that contracts,

so ensure that to price And to continuity. we've able increases secure been

Operator

from next Greg question comes with Konrad Our Jefferies.

Greg Konrad

mean to you we wins XX, thinking end 'XX? an Is given military profile? Slide growth about I In offset to the growth apply in saw those some the out contract fiscal how military in recent military market. business of wins, TGI's of program stable called there just does some that recent year

Daniel Crowley

of of that. the last we Well, was backlog our down cut been of that And rate over XXX the couple the mentioned impactful. has quarters because certainly, in the

I the So getting this -- that fiscal quite military the of they're in work, they're they're both and mentioned huge last booms, involved. those delivered MRO, refueling year. And quite seven KC-XX we

that same MRO. factory So kind that challenge the benefits work of has is offset usually helped getting rates. in saw The OEM of that not the rate OEM from to some the it's the

for tends domestic So like using won't up. levels. that you as Logistics the demand. them, of from bill spending. looking a aircraft DoD higher the readiness of there would that some of Air Air to visiting combine and see the of platforms to the within just around number the strong the shift they signal the rates. They that returned the within to to with that name the readiness help I -- Force we talking see And there's centers leaders still are not industry get depots, DoD like they're I are them that defense but to any a work and their been But at would There hasn't fact Company. see payer readiness at

to continue for cards seems will be freighters So demand no there on side. the in military then and think be to MRO commercial the decline I strong

a and those. expansion for Just consumer really demand fueling e-commerce is of spending

as continue Atlas UPS, FedEx, to support So to we're and other expecting carriers well.

Greg Konrad

like weakness? how leads And levels. backed structural Systems I aftermarket as fiscal you've mix follow-up year then sticking some a it done seems over XX, the where given about 'XX that MRO business just recovery the expand actually I initiatives and recovers? do Support, that & mean, you to just that about OE as mean are you growth. to you think the talked I for some mean strengthen to business. changes trying long-term Slide that grow any above And can peak? Just the get thinking of really there fully of wide-body about does But years,

Daniel Crowley

higher. we rates from pre-COVID, XX like going much to remind I'll MAX commercial narrow-body rates everyone were talking on Greg, about that even much, XX to and the higher

So very think to to go. I soon, going whole this we around by it's conversation to 'XX going 'XX getting than be events, are overcome be to back and going how is much higher

Now support I'm all of that's 'XX. planning that pandemic the can the the wide-body. now the greater there's and it. not than making rates why And the are But that ramp sure for and saying that headwinds we we're and continued buy with of we see international part not supply travel that on narrow-body, could

going of get and acquire the market inventory comp. the we're betting Now to ahead on not

were the blow going contingency pre-COVID. it's the 'XX, with rates higher think at But and than rates that, we eventually to published. be we'll OEMs consistent we're So planning have that through I

Operator

Ken from comes Canaccord. Herbert with question next Our

Ken Herbert

parts, repair you the out quarter? if those I'm all sort that if I by services MRO the significant to called in between -- wanted -- saw wondering the difference quarter, you in just X, growth On either your can commercial parse and at Slide in business. sequential on of a you And of XX% and out

Daniel Crowley

take don't gearboxes. and had both repair and those I cycle plants had to parts side out lay the during watch. a demand I I It rebuild people bearings staff. It's terrible. air data here off to was may I was week, say MRO. it, and a it's would XXX on offline, table, that handicap our do on coming plants it's in I and work. generators, machines spares whatnot. springs for they was skilled of If encouraging the saw it so small to more the back mean because to see the in trough, like have have it, we but be when we half last generator like call, lay they one accessories, high their that one on the Yes. so and got They

And work. material, are the mechanics times rents they're buying so We're we work, all journey. the not can then often skilled of do to all higher-end because serviceable MRO for we the the valuable do really new. certified, this offer because use we're doing happy with turnaround and faster lead We're doing deal lower that time to And cost not can and have.

come So I'd demand, it's to is repair leading it's definitely employees see more on some to starting the spares back There's say rewarding it. but side repairs. and these

Ken Herbert

that's And Okay. one. helpful

repair about -- number signed sounds mean recently As side, in it we and on the contracts particular. you've like of a the think on I aftermarket,

about XX-XX 'XX piece As to you lot bigger repair of with mix does spare you of the parts, but of a mix joint sort you and call maybe and out, think that to account a into see services the signed in parts maybe that significantly? 'XX, you've that recent spare contracts the recovery Do start 'XX? change ventures, for mix beyond

Daniel Crowley

I think so.

completing venture huge these we and signed could tell bit little the partnerships doesn't We will MAX. to win will products don't Air We And for yes, and of with with to newer spares, more do. MRO and -- France-KLM, We business That a every Aviation towards -- fleet, up think answer XXX distribution our training. also And weighted why. don't staff of that customer development with alone, that are we're through of signed you repair close we have Triman recognition joint part the but demand. Thai Triumph I these for support services up signed which fares. VSC. with and military all distributors I'll a be up be touch is and

I Logistics together the me. not he And done, level, CEO customers' of did it Force the brought my the of in to with of command out going that's much I understood call In career I brought needs Air to when the together see we and fact, had capability grow customer was number me And Triman faster. Air a down with it mentioned, typically and the level. but at has at And I've went my sort to effective. ultimately, a Center calls, And think the more traveled at we together. part teammates I make we're something

-- of and challenging Systems of in lot the So platforms. platform the And a platforms to spares to will I'm distributors We're from fuel We lot. do business. similar And OEM play parts participation on we're team bigger our do that. think all expand Support own or And parts. we part our that. not and a support, and a sell can & gearboxes us hydraulics sell our I help pumps products, also or

Operator

next with Seth JP question from comes Our Morgan. Seifman

Seth Seifman

operations missed In R&D side, think you in another statement when then that and investment in fiscal you about beyond 'XX? in R&D, about it, spoke 'XX? question talked near and on think coming up it have is & the What Jim, the about does term the where number I think Slide Support for? investment then go XX, up maybe kind and this about what you CapEx might gave I where reinvestment imply year Systems I levels when that And but you of coming does

Daniel Crowley

and XX of of in order like. the wing location that last because weighted and was CapEx the much For because In moved was structures. some side of the the of new that Vought the towards equipment the part from -- years since the is products scale, building in to part acquisition,

Jim that So Systems. And you year when million we're glad beyond profile, last I to now did of we $XX think point. be in look at mentioned the CapEx

You're gear grinding seeing high-end equipment.

hydraulics Systems Jim? more and our Structures as the just CapEx Those now contribute as seeing and the You're rigs to have revenue test flipped fuel from well. pumps. core things for to

James McCabe

of CapEx, developing of CapEx, Yes. actually in Systems return of this more. to we're of invest. a good high funded place $XX of & million And related was which existing spending year Thanks, where $XX being It's technology and we And it was change you're coming spent as on well. the million installed $XX million already our year the next is to And platforms be Dan. Systems millions right. lot last year prior beyond it's just is just generation it What Support, FY anticipate we which R&D a some will It's on $XX million Support, because & we're most spent Of 'XX, in there's the customer from risk. of are tens on. R&D. low but a Structures

that's make going we'll on. That's sure to So that knows everyone our feed future. going

Seth Seifman

that maybe a Dan, Okay. in a side certainly follow-up. take which as valid for on here the with another looked is suppliers But point was little I the a earlier, And then thinking that you've know negotiations the made to one OEMs. is flip of more past, there's in share. way, the the leverage

in be aggressive seeing extent perhaps aftermarket. might others on to the even from be the in more others you to take looking market, that So share are to the particularly opportunities price,

Daniel Crowley

I'll UPS and MRO example. So won't FedEx dynamic. some recompeting we the seeing are are of give that dynamic. dominant their an aftermarket. it's say I you

work recompeting includes so our And and that others. recompeting

the So been -- freighters. more we've the have to the less had on performance. But pencil side, there's of that. support say, around our I'd the takeaways to sharpen And OEM on on been

they've the aircraft to hey, pricing, they're example, original Can fleet -- and the that worked now bottom the the we're linked to up more aircraft. the the there, we a less products part be price. in the can. cooling competitions, of those to and robust And generates LRIP is race you more answer couple and performance, that got takeaway over lot design, is technology it's the to F-XX which of a out system? this capacity And the or early a of go more and For thermal saying, reliability developing provide heat. the on on could But engineering

the sensitivity little seeing more I'd MRO, about bit more and we're OEM. value it's So on say price on a

Operator

comes with Securities. Truist question Michael from Next Ciarmoli

Michael Ciarmoli

some line Maybe assess just of to there. stay questioning on

Just funded the & of is what at 'XX, Are programs? trying to is a there expecting get recover they should as trajectory of to be some For along customer margin drag Support, to well? looking and sense military bit going we as Systems with the new of fiscal R&D, these a maybe that of commercial dilutive? be for in margins going a some volumes be

Daniel Crowley

a Yes. do way. it Thanks Mike. We planned in

And be but So we period, certainly dilutive overly didn't could are it one shouldn't any be in invest, higher. if investing. yes, we margins

been have of the years. last couple investing in We

more year. little to going this a We are accelerate

it and that it we're of fund getting good is it. the the to news benefit think getting I they're from customers

contributions spend. So customer our as but R&D we'll contribution not net great, the of of is benefit total the get

Michael Ciarmoli

Okay.

Okay. climb the mean of it expect we I of Any kind commercial color to kind it's around, trajectory? but margin bouncing with should on like been it gradually volumes? looks

Daniel Crowley

Yes.

As volume improve. returns, margins should

As lumps any going in be R&D. to It's big I see pretty consistent not we're year. to throughout said, going the

So that's the answer.

Michael Ciarmoli

And that just number? down $XX be to even repayment on is it. Got planned offerings about or in firm Got Any cash, from any advanced a million cash thoughts then it. that going restructuring 'XX? or to equity continuing negotiations get

Daniel Crowley

the scheduled that's now, advanced Right liquidation.

now. other any raises right for plans no there's and -- equity So

I'm repeat, your question, of So -- -- sorry, the you beginning could ? you please could

Michael Ciarmoli

restructuring. cash Sorry,

Daniel Crowley

Oh, in the restructuring. cash

Michael Ciarmoli

Any further restructuring?

Daniel Crowley

Yes.

always behind quarter QX, bit fourth little but think The first on, the quarter substantially to cash largely restructuring into it carry going be restructuring from there's did forward. should less us. a So over it's is we I of large in going for moving but

Operator

Our Walton with next question comes UBS. from Myles

Myles Walton

systems. if chime margins the of Thanks touch wondering was could I we the on in.

from color it leverage the more you the Jim, also Can some give impairment there sequentially, in on the for, that the growth? X% and 'XX near-term Support, think that sales talks you're of to into I it & I actually growth on about for growth near sales And Slide looking last effectively Systems went then fiscal vertibles backs implied down why exclude for it what margins, XX, term. if an wasn't Is middle as business? sort quarter, increase.

Daniel Crowley

the and X%, you can But on, year-over-year, higher the I'll than margins. were in year-over-year, that start, but So than it's on the the probably XXX take Jim, if counting add you number sales is out we some growth of X%. work lower

little term. out we'll up, short delivered for and as recovery. in aircraft that us of trough create So But a from back a did bit that inventory see rates the that

we have tailwinds, the over have the presidents our operating about know to depends baseline, but today, got we tailwinds. it's if pretty will So I've have growth rates it also on a And forecast. that to of we've as what's given -- we rate. pricing challenge company in with rates your all double-digit healthy planning growth the we should, several

growth And growth we is margin in both parallel, and getting achievable. Jim? revenue happening so think,

James McCabe

Yes, thanks.

normal of is had in think did. have on of look QX. spares. stronger out margins, more we may there to been they Dan in terms also bit a We took of little a the of a can there where from we mix restructure this efficiency. and But there back costs massive last go little QX bit was higher I have have the quarter. period. disruption a mix, factor but inefficiency lot is I MRO be was It in caused the may and Fuel lumpy. So based spares to spares, at mentioned

increasing So to look we'd moving forward, margins.

Myles Walton

that in it was side? the the just on restructuring business the was Systems Or significant? Structures Was

James McCabe

across It the Company. It company-wide. was was

Myles Walton

Okay.

asked I'll this it been a Okay. And of ways, couple so I clarification, way. ask guess, just one it's

-- less interest if nonrecurring-ish out 'XX? on Slide took is XX underlying me, put you've -- and positive excuse you EBITDA taxes the one-timers or in things out business XX, it the I and put cash So CapEx, that cash fiscal the

Daniel Crowley

giving not but drivers guidance cash think at look yet, headwinds and 'XX. I you we're can the So there's of that a lot see in

Operator

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

Ron Epstein

normal, to think we the flow back sort cash how back think should cash out world the we what get 'XX or about totally normalized should How flow things -- about that we once of when beyond normal -- conversion? presumably, to gets gets conversion

Daniel Crowley

as LTAs. the structures Yes. only some servicing loss-making systems, having mentioned, in to We're of in not I'll also looking have that. start, number not to of Jim, those add and you not I can advances forward to but to and be programs,

you So peers. get with extend strains, profitable industry within to if happen is two you Jim? that's get and chop we going can conversion finally years, away And contracts you think the the that more we consistent of cash the and then our rid at maybe your underperformers sooner. bottom cash to then

James McCabe

We're the at I that is tell cash give our towards forecast excited commit Yes, ready about to the some them. not in can because externally I structures to single team conversion companies love would working to high and them. them, you I'm just digits. is you

should the systems to getting there get as the companies, And next teens. through for in looking So it years. forward couple be we're of we

Ron Epstein

supplier right? should than cycle is would I conversion when be through a it XX%, a right? doing sometimes, XX%, conversions it, I mean, I mean below mean you're I and depending hope, working maybe sometimes with capital. on typical over teens, cash it's free what through better XXX% the

question. teens, you maybe So be to didn't right? understand than got It's my better

Daniel Crowley

Yes.

So as percentage sales. talking I'm a of

Ron Epstein

As a Got of percentage it. okay. sales,

it just by what Okay. that you that? confidence will Or then out? it guys are XXXX as gives thinking led you -- go And back Cool. -- rates retirements? we get is get above will how Is about

Daniel Crowley

I they're MRO with looking side. contact airline how them, a by of their today. budget on much So cost amazing I've in It's the stayed much is more more at and most CEOs. consumed know the lower of fuel-efficient fleet, MRO

fleet, aircraft, lot and And environment, the broke So that advantage. above in Europe not again if middle China tied tailwind. to economic there's be the approvals levels another internationally that, a start is so. expansion I ramp pre-COVID, the They get that's And to we'll that It's the I the do shipping XXXX in just into a domestically. of particular, aircraft whether selling drivers Boeing they already will assuming for travel of through. to anxious And to And underlying know demand for they're in happens, classes mean that happened. already in Asia, China. see, there's them some for government can get incentives a domestically occurring to incentives competitive but legacy was retire but of then newer the the

remotely really learned traveling favorite full I the one pandemic order maybe the are who's in quotes than then single I And permanent commercially, about loses Certainly, believe first the leisure, trips within for reasons, forgo company now. my will that some are think and all created my to So there airports demand travel travel I digits. maybe a to But work greater is a of a competitor willing all and to fly start major and again. companies. don't still and trips and the business opinion. That's that travel decrement we've

So as going plus to to there'll three there's gap just fewer a a been will the volume And a -- regression where be years it's well. -- two just I produced. -- of think that it's of help of on production mean bit aircraft happen. And were to

happen optimistic. can 'XX, 'XX, may 'XX, see not It happening. it I in but I'm So

Operator

This time the concludes Time Fourth a.m. Earnings Quarter gentlemen. Fiscal and replay X Triumph This have at starting Conference a ladies available XX:XX Group's today is call all Standard you, Call. XX:XX questions that until Thank will have today. we p.m. Eastern XXXX at Year will for This be June

can you turn can X-XXX-XXX-XXXX a dial X-XXX-XXX-XXXX now access dialing parties You code and then Thank access code Have XXXXXXX. by day. may and XXXXXXX. replay participation. you your All for all Again, access the nice disconnect.

Triumph (TGI) 20 May 212021 Q4 Earnings call transcript