TGI - Earnings call transcript Q1 2022

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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 2022 Results. This call is being carried live on the Internet. There is also a slide presentation included with the audio portion of the webcast. [Operator Instructions] You are currently in a listen-only mode. question-and-answer the a management. comments be will session introductory following by There behalf would statement. I the to On company, following like of read the Certain Litigation constitute of statements call within on meaning the forward-looking the Act Reform statements Securities of XXXX. Private this unknown from known which Triumph's results expressed or any performance, expected statements results, and to achievements or cause uncertainties the achievements and future forward-looking other risks implied forward-looking These be actual or involve factors may materially statements. in different performance financial non-GAAP which of to reconciliation on company's the that in release note measures GAAP press their included can measures is www.triumphgroup.com. Please comparable found website the at be

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

Daniel Crowley

business, retiring balance we our to growth in volumes, focus improving and and cash Kevin share while organic you, improvement clean several Having by pivoting fiscal hope Triumph's Earlier sheet. margins and QX well. and our strengthening everyone our our and demonstrated Triumph MRO pleased we non-recurring uses. portfolio increased all on to continue our year-over-year I reported safe all I'm stabilized to structures while most XXXX. to business, come quarter pandemic through today, and results you're year first growth earnings for QX up driven and that strong the call. core welcome and exited was of in Thank company-wide,

the our reduction continue actions recovers. Our boost results cost as to market

promising see continue on We macro trends fronts. quarter multiple this to

translated to a work both nature of orders order strong in aviation continue recovery. volume higher First, maintenance, terms overhaul and MRO be in coming commercial the of into for the flow work. repair, demand of for increases in and indicator

MRO XX% more indicator sales as which inductions led the were X% an XX% recovery, traffic and structures. increased the than job the for with accessories quarter. overall spares metrics, overall Aftermarket a early sales Our repairs and engine increase up serve for quarter by for carrier sequential

and and military & a for up to enjoy as include spots platforms rates for order and cancellations. budget of XXX wins the offsetting programs have both narrow-body June for have to by XXXX narrow-body was source pandemic. continue Second, highs new aircraft XXX, seen for Airbus flight aircraft. particularly new United's increasing be for XXX May transport order United Favorable been Boeing this Delays These the June XXX to first our with Triumph's since Bright Southwest value and offset production by aviation. Support Orders air Commercial MAX reinforce and of offset planned in FedEx widebody content. positive. platform be support, are continues and XXX reported the helicopter new for recovery by were aircraft, strength orders the commercial and will in Triumph supply. diversified Boeing Orders congratulate completing XXth in MAX the on engine the order and contributors key customer upward AXXXneo military Airlines for Airlines programs. the followed of of from indicators want have to the AXXX I hidden assumptions. base uncertainty, XXX actions demand which XXX June Combined able XXth, performance, of ramp beginning on more MAX-XX risks. and OEM the in clarity those increasing backlog travel focus revenue years XXX Systems optimistic coupled commercial continued contributing orders trends to continue. we declines to backlog our trajectory reflects recovery a fiscal continued for slowing see financial Environmental is with now shifting are reflecting path cash follow. XX,XXX lift rates percentage de-risked build XX demands guidance of in our sales effect the momentum The from Triumph months Triumph mitigating And with recently to for year. balance demand. not our the improve have the transport flow social and with and Triumph. of high of positive Similarly, markets our exit now military fiscal as cargo stands remain The these aircraft. XXXX, rate. near-term MRO for to we to in we and initiatives military commercial strong we conservative of create business. industry's on XXX's rates positive its and a now we and brackets the our the After production a will comprehensive MAX. continue had interiors to material Reductions for inventory stabilize. to recovering production already revenue Commercial announced MRO production combined on AXXX approximately priority line and and benefits that provide a twin-aisle at governance demand Boeing build-to-print are Board. diversification and XXXX have over We're

efficiency. the fuel enhance wastewater While reducing COX investment development considerable energy aircraft of has emissions, to been usage new in and made products

products, and We lower which of production lower has additive substantially across costs core manufacturing the are adopting weight. our benefits

conservation efficiency heat an facility, exchangers, drag. similar use as, which eliminating XX% and less our in making components hazardous closed-loop reduce production by is and implementing recycling energy project to solvent in lead-based, Triumph are will enable We converting water. power in has efficient non-potable a projects more with electrical waste, to such systems largest launched annually. investing advancements energy airframe Triumph

X, meet work, in or enabling our market lives with MRO I companies technologies. and Overall, some to showcases highlights. be Seattle inhabitants, that indicator of in are a recovery. are aftermarket facility spares summarized leading be either a with quarter's enhancing future line with of of of expectations, the R&D slide first initiatives quarter John above us Triumph's continue this of Earth's featured the As episode to with Earth, On objectives. pleased results, a eco-friendly which an Triumph's the will through result array our of which inspiring we're Holden, advanced

cost Our portfolio sales in improved margins enterprise. efforts and the reduction operating expanding resulted across actions,

as the on our recognize the Last, final recovery our that and will complete our components month, XXX macro repaid production quarters. markets, are continue the and market while and in track the XXXX. last bonds, loss-making to yet fiscal initiate for the At point, remain continued We stability next financial be positive, this the is significant of over programs. We in to strong we enhances the behind our our preserving remaining confidence pandemic the balance of of us improvements outlook, guidance in broader worst liquidity. uneven we this several trends XXXX

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

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

UPS was actuation. growth shipments third-party Support Systems our and for led and organic core Bell by sales commercial spare for as rotorcraft than to spare returned Systems primarily AXXX, within XX%, wide FedEx driven narrow-body OEM declines. quarter, sales and and up maintenance. for for while cargo XXX our AXXX aftermarket the First, Shipments MRO are rates sales MRO EXD business. proprietary body gearboxes commercial improved Support deferred Airbus were military and increased XX% & XX% offset aircraft production revenues by more

Support our returns to of to our repairs, platforms in sequential decline. to a sales shops. Military a to driving maintenance helping temporary as deferred Military MRO bow Systems CH-XX the the the growth We comprise EXD, and & sales XX% commercial such XX% of year-over-year. in increase our as offset wave anticipate military UH-XX sales now continue aerospace contributed sales

will we As mentioned, our at fulfill deliver month, which this XXX our obligations. structures final Triumph program will point

the our large stabilizing the profitable allowed second facilities structures be in & of across interior as cash-consuming provider military update will and an on non-core capabilities. of Jim structures with state losses. business. two all customers, in Systems performance commercial programs to provide future We of QX period largely will our close achieve Support the structures a an dedicated configuration adjusted solidly December, to of them to on ending remain legacy long We Setting structures, to on XXX basis. a pure-play track exit

profitability, installed to the recovery weekly intellectual with portfolio Moving and US. on normalcy forward, XX%, to property to from return continues will and our leveraging industry. domestic to which economy average airline aircraft expected prices, continue aggregate GDP, capacity travel with corporate in towards since bookings in declined few more XX% and within TSA strong margin as the secure XX% benefited price updates over returned recover March. the summer XXXX up increases service increasingly in indicate and substantially steady have the improving globally the than an expansion Parked US. industry plans. quarter benefit are airline rise with levels to and state a Reflecting bookings, the fleets of in aviation throughput to and Early X% we global load to airfare XXXX indicators progress X,XXX factors bookings annualized The basis, A from XX% economic carriers. our on

which the including and in watching our closely House encouraged for on and XXXX, fiscal to programs CH-XXK, see Finally, Appropriations EXD programs in the and as backlog. key and for committees, strong marks are our in should such ensure defense predictability defense stability defense we are legislative both support Senate Appropriations emerging military programs F-XXEX

deliveries delivering Boeing Airbus culminating and June lead know, numbers, Boeing single-aisle each the strong segment XX XX. aisles the single delivering the the gratifying you will within both single-aisle with Airbus for in and aviation As OEM increase recovery, quarter, month

trend to momentum, positive of for are be fiscal the encouraging year. to ready gain We chain to making expect is balance ramp. Triumph expect and continues supply this recovery across Overall, the through news the this and I the the aviation continue as plans

returning capture are expanding positioned our business to increases We while programs. and OEM MRO defense well rate

for wins Turning to quarter. the

received designing global engine upgrades US Navy engines. to and controls and Army for Electronics Our fleet both are for Controls US Apaches. and FADECS Systems fielded upgrading Seahawks TXXX of the team We orders

our F-XX E/F, our and gearbox provider We exchangers sustainment. FXXX and XX% developed C&D gear Triumph engine This of through on the and third-party builds on legacy designed for test teams. are FXXX entire most gearbox development the GE products manufacturing and are significant spanning solutions, where orders F/A-XX, for engineering Pratt life drives. accessory IP. gearbox the of design FXXX world's the is exchangers gear of and secured engine. largest the from complex for F/A-XX capable the by Triumph upgrading heat heat Whitney, We aircraft-mounted we of from have & cycle

and Lift classified us value as such customers and in the our opportunities capabilities T-XA, programs. exciting Vertical Our and KF-X, the engage new Future

MRO look our the of and to Tier to support to them Triumph on platforms. largest legacy Some Xs. customers allowing in We are space new concentrate offloads, OEMs program

we quarter, agreement Tier machines. the overhauling completed Aerospace, cycle X Collins with air For another important

like to several I'd our developments Finally, business. highlight strategic thermal in

We additive manufacturing are use Force engaged University the Force heat design Air to of to an sustainment replace Dayton to Air that effort issues. actively address Laboratory with and fleet in exchangers Research the castings

While are heat which areas, the by believe exchangers, has including other suppliers to we additive we started potential and casting traditionally pump with housings. constrained gearbox expand into

trend restructuring next goal systems. summary, the our and an we production segments. non-recurring improving pricing new uses to Finally, initiate pivoting volume higher-margin are the heat develop life year. market across continue In to the cash with growth product their planning into this confidence support from the are and of our guidance across increases, contraction company. space over cash giving favorable we quarter-over-quarter our in more cost summary, grew several improving doubling and increase year-over-year. support retired service our profitability agreement introductions de-leveraging to we rates quarter financial expect enterprise for In The markets lift space as and exchangers while combined fiscal with margins commercial completed the and We horizon Paragon outlook IP-driven XXXX, us reductions, vehicle to of for and

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

James McCabe

cash started year. our and Thanks solid the Dan, continues as commercial have flow organic aerospace quarter first recovery. year-over-year enterprise, margins balance the to market taken the across have growth its The morning everyone. the enable We free with actions we and us this year fiscal through over improving positive good of

profitable We continue core and debt, on business. businesses our the our remaining and to to execute pair lines, product to non-core few on maintain focus plans liquidity decrease

and fiscal environment basis. our diversification to performance on I in establish will improving the unit the consolidated and us an the of the performance year. the our quarter, market Our business discuss guidance give confidence financial business for adjusted

adjustments. please our XX, you'll So up Sales slide see quarter. consolidated for explanation supplemental slides are organically. release our for the and our On of press results the find XX%

to the up year. impact structures prior recent X%, XXX and led the $XX compared income QX adjusted margin operating lower of operating year. prior While from points Adjusted sales the programs and to divestitures the basis was was sunsetting million.

and We continue Support profitability basis quarter-over-quarter. results the XX, to in in continued sales from were Systems adjusted improve recovery aftermarket. benefited an on to With up on slide & X% respect segment the net

improvement & benefited were point was on This the in an and in from slide the increasing headwinds. While increase from demand. XX% operating year for Support this Adjusted Systems wide-body XX. XX% MRO segment prior from offset XXX quarter. year sales XX%, military up work basis quarter, narrow-body prior OEM margins Summarized

net quarter adjusting the XX% the XXX divestitures largely year's and impacts GXXX increased structures after due and sunsetting sales pandemic the prior First to for for of programs.

continuing operating As modest Red were by X. on for stable Oak the margin include through evidenced earnings The year. date quarter adjusted and prior businesses to divestitures sale. is revenues on improving X% of and XX% the in compared The Composites in quarter the results call, completed the and May noted the of prior the our as the the business

month. complete I During significant production XXX progress team the and Prairie, visited has to saw achieved later the of this Grand successfully quarter, our the facility Texas our the

in several remaining facility with is large Stuart, structures in a and are active strategic we parties. Florida profitable discussions business Our

Turning QX with expected of included XX. QX. obligations down of liquidations, million settlements, cash retired liquidation quarterly we advances, our and XXX no to two $XXX QX, slide In to of advanced discrete wind payments related production. in restructuring

primarily on of working on We improve commercial focused our uses of growth cash, initiatives working the $XX capital managing aggressively several in modest support production increases, the on sunsetting cash quarter of narrow-body these anticipated platforms. used in Excluding million we first rate Support with capital remain across XX and OEM inventory core support investment MRO of expenditures rising as a to net remaining anticipate Systems quarters, and debt will summary turns. three in segment enterprise liquidity. our slide demand. over our in our Capital targeted of the is accelerate we & On

paydown notes. $X.X our and and the billion end million combined about the completed the outstanding quarter $XXX mandatory of Our was first notes net remaining of we debt was million of at In approximately quarter, approximately cash and XX availability $XXX lien $XXX million. the redeemed the of

XXXX, FY the a 'XX gives Our rates cash next excluding to guidance. potential billion $X.X actions strengthen our anticipated FY is until our and continue debt on of credit. maturity of XX revenue not summary production we improve us to billion. expect to and divestitures our deleveraging our Slide is aircraft impacts flow of time for Based $X.X which executing 'XX

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

chain million critical cash $XXX in supply million in news to and interest million fiscal we unit breakeven After flow in positive expect in approximately of cash $XXX is expense generate QX to year adequate inventory solidly net is QX about year the of be materials to inflationary and million including cash to quarter, refunds we beyond. of approximately the for have over use of lock and secured Cash year, with million $XXX taxes work consideration interest. supply of QX. of first in take the pressures. the the into for use cash in expectations free majority to our for is approximately $XX $XX vast certain costs million commitments the balance expected earnings and $X while and approximately good free total be received approximately expected we Our The

be We've million full in cash million $XXX expenditures year, of progress the $XXX of made million. our predictability in operations profitability the $XXX from million use solid of had expect with organic to the in cash to balance us and We cash increases. we are margins more margins forward. to and to competitive capital the $XXX we a growth moving flow. and operational Cost volume significant company approximately For efficiencies million taking $XX us and and cash of will improve to continue over Measures positive free resulting expect our we in have to and making taken help improving improving reductions sustainable year. are QX use stronger as

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

Daniel Crowley

we worst confidence signs us are customers markets, off rates the with within recovery the We're as start that the to as pandemic Jim. us. us. Consistent Thanks behind of our give continued MRO a flow momentum Increasing the year. good build expansion we'll narrow-body quarter-over-quarter of record of OEM put cash the by pandemic of behind positive drive core full our balance to in business free is the margin guidance, the year track over and our and with continuing growth production

We continue becoming divestitures. position of hard more to reduction, to Triumph programs leaner, the for positive loss-making the future is cash cost exit company. a the and profitable Triumph take and including actions

We our questions. unlocking a stakeholders we're hidden rates we're all any and value in and for take continue now sustainable happy improving business, towards to our to responsible delivering our way. and future Kevin strides configuration in benefits state make the win

Operator

from Our Arment comes Baird. with first Instructions] Peter question [Operator

Peter Arment

update an mentioned with on you're progress that one you you the the on your latest and but just your give us left? the you've maybe kind been how update with Collins maybe just the us with -- are OTM making. on Congrats could status Dan give the doing an what's LTAs many there of of OEMs

Daniel Crowley

Yes. Thanks Peter.

fared to years IP I the coming in about and to supplier. they've goals and XX the negotiating as new them We're achieve switching in now. have And the we're though as reset to these that now strong returns. we supply. haven't those are set major cycle aircraft us. is full have for both often a 'XX joint because OEMs of because And pricing work duration. production together and X thresholds is it for even tend continuity have because the stuck to ensure years over to of source we have agreements And right supply And -- any through to say it them got contracts position. But of clauses. we've been a They be on going back how about are two we've a with cost is in The period requalify certain exploration continuity long-term work one we well renegotiate products And mutual business of kick tend these were we've in 'XX. many Triumph view to a and of X-year do high. negotiations cases, encouraging And years really lost to it And They needs -- happened we they so supplier. the aftermarket. problem-solving has Triumph lot to may old to have to XX all be to So and that these they've on fiscal affordability? able escalation already customers what's that been didn't in

can what let's Now together. about else talk do we

over on the how can progress encouraged and I'm So comment by time. will it Jim contribute

James McCabe

Yes.

just customers. price this to on was a Dan process. we price benefit there but programs, year And the mentioned with as about going it's Dan the you of not significant -- just particularly a fourth and together quarter reduce bump increases some in we're good As costs from worked it's said them to continuous

So solution get we best forward. moving the both

Peter Arment

And payments? of you'd just either you're mentioned Stuart could -- time be follow-up a maybe any then use you just us de-leveraging active as that give advanced on you proceeds on or just Thanks. And in focused any expectations line. on discussions the

Daniel Crowley

over start mentioned It's I diligence phase the the interested parties. then And opted due tracking and line the really now in over. five we've But got out. has bit a the Lazard that they're Yes. site laid what's at end we on had -- last a a to the out of time call, and We visits in details. interested buyer had very they

to go this a phase signing the quarter. in next expect we into So

So we're not done. it worried about getting

track tanker. on And our record order sell itself. average for leader this successful of distressed. multiple think with distressed. is of backlog assets business workforce a Triumph XX not I an divestitures of speaks the which great a with very strong there. a the and lean performing were well. able some we've It's we've got to both It's XX XXX It's And for and times got been freighter

get we So it I'm done. Jim? confident can

James McCabe

It's Yes. things a done. and is getting going business these have of we process track record good and good well a

we're lien confident to it get our So debt. reduce to done. first The will in ability our proceeds go

in So one highest debts. it will leverage of cost reduce our

Peter Arment

I in Thanks. the Appreciate queue. color. will the jump back

James McCabe

Thanks, Peter.

Operator

from Our comes next Rumohr question Cai von Cowen. with

Cai von Rumohr

much. very you Thank Yes.

advances you give cash discussion little us status the color any flow terms the magnitude trends in could then see those you of the the obviously terms was prior of out But kind to remain that in color It them you back? us maybe flow. nine of And positive quarter. some took pay you how advances. of quickly the so Boeing on in what's And you give So and a much. negative can have the cash Thanks maybe of months? over and some

James McCabe

Cai. Thanks, Sure.

we were quarter of non-recurring did due us $XXX the It's this two did had cash million $XXX that days So get of said quarter. of those. million we at cash They couple we paid They we and and advanced them in and liquidations of those uses. about first behind the the include early. had beginning used quarter a we of

in We settlements. million quarter cash $XX QX only. I've we last Other of year. $XX And quarter moving do $X the million quarter $XXX forward. be do of in about left But QX have of of we uses of the We second there'll So as now about was estimated still usage. quarter million which expect advances. QX in we million no expect in advances. about mentioned million $XX and had another in customer this a liquidation used

better that. did we on So

well. we in the terms and use that's $XX of million as quarter sunsetting XXX, a In used

over will start the We of year. QX and reduce in about then use the same balance to the it'll

The second half will be about $XX million.

Daniel Crowley

for using we're which the same said XXX? You the -- Jim

James McCabe

right. this in well of the million And year. first carryover $XX use costs from there restructuring as That's quarter On restructuring XXX cash last costs mentioned for was we accrual $XX another then million. an in

over uses are reducing these time. So

advanced you be the of forward, will reduces If $XX look the plus million million that on liquidations next time. about quarter. next none $XX settlements There's quarter customer and over based usage to XXX

we're reducing even, forward So balance to of looking these year and quickly items going cash positive the these. for retiring the while

Cai von Rumohr

Terrific. Thank very much. you

James McCabe

Cai. Thanks,

Operator

Our Myles comes with UBS. from next question Walton

Myles Walton

Thanks. profitability end about Is the the rates? Good hoping it you year color within more And the that. talked little a you horizon. planning could morning. what's Dan, horizon doubling dollars? margin year it Is to over base that I what's was planning? and absolute bit put

Daniel Crowley

Thanks, Myles.

to Costs we're Then about XXX. us And half of as choice, then, shoring our And look like you and that were capital. below over incurred XXXX loss-making Triumph up Jim rapidly behind pricing in years that of has we that. disappearing. programs, misadventures plants, those from started to on all we programs the used where are that around the development to incurred what XX the now. Bombardier reducing Global mentioned, cash there's when programs, cost cost of XX,XXX are weighted GXXX sunsetting by years to the from at and sources workforce those at So gone restructuring, XX down cash out the about now five seven our last consolidate

margin end a source restructuring. of And coming of also very expansion. that's to we're So the

OEM help we volume add expenses which that, will on So us for you that margin both during that volumes But then increases reductions benefit incurred to the as expansion. pandemic, we've MRO. return, cost done on and all

been has source and support products government a also new services. then and Some

that back, OEM margins have XX%. of MRO versus a very be going is factories tailwind. margins, real whereas to be might their XX%, relative MRO the And strong generate MRO to We of margin contribution comes as north expansion OEM

four-year on do planning horizon the expansion over planning which So our horizon. we main message margin

horizon. current the planning is XX% to XX% So

effect Next our will plans. believe like by we any XX% year margin those driven expansion It's one the XX%. which It's it of volume, to be de-risks contributors, pricing not MRO. cumulative or all factor,

Myles Walton

Okay.

So XX% referencing what terms you're just is that right? of in to clarify, is XX% doubling to profitability, Dan.

Daniel Crowley

right. That's

Myles Walton

assumption P&L in Okay. in? just this have clarification, the maybe do quarter, pension the you the on income, And a of for non-service excluding curtailment the year, gain that

Daniel Crowley

could you sorry, repeat I'm that?

Myles Walton

Yes.

assumption non-service into baked the the fiscal for EPS P&L, Within XXXX? the what's the pension income,

Daniel Crowley

million a to $XX schedule a that be be in should -- million. the should It It's $XX there about presentation.

Myles Walton

Okay. All much. right. so Thanks

Operator

Next comes Truist. question Ciarmoli Michael from with

Michael Ciarmoli

a bit Hey, taking the Systems on guys. there I relative basis, question. were the XX% Thanks Support good maybe morning, adjusted just -- up XX%. guys the guess, XX% & guess on for margin margins, I putting maybe little weak to you

with You've got the higher presumably spares coming through, margins.

can or of kind we'd on margins give us trajectory? view that resets. what's some the have there see contract these color thought, getting & I you start would You're of of to better in Systems Support. the sort What

James McCabe

Yes. Michael. Thanks,

The the Revenue is contract We're we're quarter-over-quarter. we year-over-year. yet. out. have are prices Dan of overnight, a improving but in it's we for happen It think restructuring improving making still of combination I elements progress. doesn't renegotiations We're And it's all journey. some that about. the a kicking some aren't recovering, but getting talked

towards going to continue So moving to margin see forward cadence a our we're of improvement goals.

Michael Ciarmoli

there Is changing quarters. bad I of for mean, that there? now? difference in businesses. something fiscal were you mean, I commercial XX% rid right XX% different? is the I up gotten there Is biggest you mix presumably in putting Obviously, mean, down. XXXX certain anything

Daniel Crowley

plants few actuators of the down let's our say, that do, at a MAX. for is commercial So

temporary We're a MAX. So building increase XX%, Boeing rate XX% forward of the to a absorption couple challenge that's of looking a at that around has the much a put those of a rate for up composite plants. And month. very we're for kind

Some and little little year we're plants plants a going get then lower. next higher, into some the the But thereafter. XXs XXs a to

-- of to we've going the So get the in profitability -- levels to allow mentioned be past. to you back us that's that that

programs production. a couple development of that are have transitioning to We from development

gearboxes doing I contributing to T-XA they're earnings. those. and we're now right KF-X, for But So the mentioned, not the

So contributing. right now, those not are

But short-term quarter to something coming we So in there's we're very on that expect are the by encouraged encouraged That's earnings. drag – we back. the a up year-over-year earnings. MRO volumes And TSS sustain. on we're by

One reasons, others do do the MRO. cycle in not take We're which components that that, the maintenance again service out of count-based we're high-cycle recovery heavy thrust seeing repair. engine mainly MRO is of are they are aircraft – to that we structural reversers large and where not

margins that because year we're And So We stop than cited fiscal and going go done pull intend reasons back what uptick the of to at not we're where are. earlier earlier. others will levels. then help I us seeing in in we've to MRO to XXXX beyond, they prior

Michael Ciarmoli

Got Thanks, guys. Perfect. it.

Daniel Crowley

Thank you.

Operator

question next comes Robert from Suisse. Spingarn Credit Our with

Robert Spingarn

Hi. morning. Good

Daniel Crowley

Good morning.

James McCabe

Good morning.

Robert Spingarn

million the little the in core I of you I non-core – be just to to cash into about, businesses and think $XXX QX year again for are the mean added the the use. positive right slightly flow over then up kind the a we includes in that what back if generating to bit rather and core QX this cash are sum businesses just if $XXX for up minus this Is that year rest in this go of or would flow million want maybe Jim, it the year. breakeven? think, Does maybe year in

James McCabe

Yes. right. That's exactly

million the the you presentation, look second the FY expected in XX If XXXX at cash driver see $XX advances the – can still for page in you

Robert Spingarn

from, yeah. you the $XXX where million got That's

James McCabe

That's million. correct. $XXX That's

you exclude issues, of year. for cash three those positive the kind If non-operating you're discrete

Robert Spingarn

for Modestly. that what contemplate does Stuart? And

James McCabe

here. still Stuart's in

divestitures. guidance, we not have for any So future assumed

Robert Spingarn

company think is is other But is stuff like assume profitable? gone. about the Stuart looks because it's – is other and all I Right. In trying when this gone words, I'm to contributing Stuart what

James McCabe

Stuart Yes. cash It's profitable. in positive year. is the modestly

Robert Spingarn

to – part of for a away? from And see could move the then business And But lot Dan, support pressure near Okay. seems least the military there fade to see primes military It talk like they some of we've from in growing you. point actions during and just of the seen I sequential defense have just the could it a pandemic. one military adding in could where taken the know business the you March suppliers, future – you the just that the Do the about because in we and as June? is chain supply strength be DoD contracts. parts some a of you're at

Daniel Crowley

of reach plused say, necessarily very to Tier that to expect out to like was particularly question And platforms it called quantities. help been depths no X supported some XX don't days me Triumph? down help programs, directly on helpful suppliers improved Warden, the We they payer and House But of that marks But in what's the OEMs contribution. the Senate a are terms and to Triumph short-lived but your There studying many been – do. have and well Kathy all and a we to Army, up Triumph more the the we've and exposure bill that's and support those big out, – cash that payment Tier has X at X pandemic, platforms. are their Northrop During time. Tier have do was how

spending lot their a inertia in certainly of aftermarket. shift some be them next years. from the seen lot DoD year-over-year. line a think So losers, over out we the spending. is a spares the there'll growing the improve We've to any readiness, thankfully, winners coming not be There's signals support that, defense on of top But there where in of their and challenges I priorities will and few

are core about heat Those we all military engine our So fuel systems, on the good our refreshes helicopter businesses strong we're defense business. Quarter-over-quarter, exchangers. landing actuation. on feel position controls, seeing gear

I So expand contractor in-person a frequent the as unmet way needs. kept we been first by have I at soon which the for come Care a as learned were aftermarket. and we met Triumph what And during in. of customers, is for the And took DoD's we our the refrain with were out as has first quarter, Ogden. to And the meetings road. visit, the – Logistics and in our Center went to readiness, we'll Triumph objectives on just they many supports continue that they of that is lot

of my also cycle Triumph pretty solve air I mentioned And go structural me hey issues fairly about But say, areas offerings, narrow can't because niche-y what choice. Ogden their support it are. work them the defense accessories, aperture they And And And Question is new in our back if machines things my solidify name a are today engine support. and think partner issue sometimes Triumph won't aftermarket side as we're can we in And those unmet identifies type such needs our I readiness talk script. help I I for Triumph requirements. don't helps I this. needs And for reversers. as other with to the that thrust peers. in them, about want repair, on to starting open

aftermarket. So I'm what we do excited can in about

And so in far marks. we've budget favored well the

Robert Spingarn

to change the any the but recurring of Not here? quarter-to-quarter the up? it clarify, aftermarket? programs, or Has have slowed gone meaningful were one at new just Just or mature other kind your way in you all seen

Daniel Crowley

No.

haven't. We

been We It's haven't seen a change. steady.

Robert Spingarn

Thank you. Okay.

Daniel Crowley

you. Thank

Operator

comes question with Instructions] Epstein America. of Bank [Operator from Our next Ron

Mariana Perez Mora

for This everyone. morning, on Perez Good is Ron Mariana today. Mora

Daniel Crowley

morning. Good

Mariana Perez Mora

the Could question, with a the discuss conversion in sales? those target? longer cash you of, or kind to [ph] free cash or What, volumes terms path conversion teams follow-up term to commercial I'll view. implied is switching please So like flow profitability but the to mix probably targeted

James McCabe

future. very we're looking the period-over-period cash rates But Look lot are items, and to terms very to be we're right all year, of is if Thanks ranges very took discrete We're we are strong we're to IP been of we're are as now. this you we're able confident flow. for their positive. to to price and for earlier costs. specific moving out going year not pointed strong right Rest modestly forward business our assured which confident cash this core years give to cash And to able businesses the future haven't this forward, our numbers is now giving content, on those specific very The the those improve to related going for And be conversion uses question. have out to on year's guidance. the ready that a people cash cash focused and able for guidance ability give improving guidance. give Mariana and guidance to pleased manage in

Mariana Perez Mora

in one And do the interested you levels? on related business like are jets, On that increasing How to is current Okay. your exposure. exposure future? next you from see

Daniel Crowley

our potentially we gear for which some Yeah. has the on do And as On example. structures. of business a jets, little was do position, reduced Aircraft Triumph mostly bit an we Cirrus landing --

We with that's really have But focus. our good not Gulfstream, relationships Embraer.

the revenues. support contribute business doors business don't not outside do have landing And gear mentioned I are Galactic If space. certainly core and focused between I on impressive. entire gear different But in it on applications. jets. a And business require and shields Our some for & on them. inspired those has expect the forms there read is a of shots is aircraft arrangement our the us. Support as we'll significantly Sierra obviously the tailwinds very cyclical We it Virgin landing encouraging Origin but increasingly to our defense or heat heat for Chaser, of community focus commercial and the Dream match we're aircraft industrial jet the really which Nevada, I is by It's for that actually shields. there's Blue which business. recent our to is Systems

Mariana Perez Mora

last And for one me. you. Thank

mentioned probably XX now years like Triumph? could opportunity You for that five space. from How large be

Daniel Crowley

it's it's to the an bust. exciting work of I've And business and very fairly consequence to volumes that -- half -- for tend in space of low. great be but a worked in probably my the career and boom and

of get there to of board. we'll a are the X% environment off than But match going we the XG have commercial to space expect another level you where heat not provide exchangers beyond technology of to But trying heat aviation. to where it solutions not to solutions of It's because revenue. are challenges the the needs between for repair So platform. bring inaccessibility is Examples contributor. they're in our working be more a go weight big at

with that but opportunistically. So is match a our some there of solutions IP good do we'll

Mariana Perez Mora

you. thank Great,

Daniel Crowley

Thank you

Operator

also And Triumph since no with Quarter conference. replay Year XXXX this a Conference There's Fiscal concludes there Call. associated Group's First questions are Earnings further today's

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

Triumph (TGI) 4 Aug 212022 Q1 Earnings call transcript