TGI - Earnings call transcript Q4 2022

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Operator

Welcome to Triumph’s fourth quarter and fiscal year 2022 results conference call. This call is being carried live on the internet. There is also a slide presentation included with the audio portion of the webcast. Please ensure that your pop-up blocker is disabled if you’re having trouble viewing this slide presentation. All participants will be in listen-only mode. please followed conference by assistance, the by need key star zero. you signal specialist a pressing Should After today’s presentation, ask questions. there will be an opportunity to on To star you question, your one ask telephone may keypad. a then press question, your then press To withdraw please two. star Please note being this is event recorded.

and this that Tom of be Triumph would not statement. is the transcribed now who approval. Quigley, I or President rebroadcast Controller, like note Group please property Relations a and introduce Incorporated Triumph’s provide addition, Vice brief Investor call In written to may recorded, of will without explicit opening

Tom Quigley

Chief quarter morning fiscal joined Thank welcome company’s Executive Vice you. Good Financial and Crowley, and Jim Dan earnings to Chairman, I’m Officer our Today of and fourth and Chief Senior Officer, and Triumph. call. President the XXXX McCabe, by President

we’ll to and returning improved the to which Private be then with referring our the will are on to quarter found forward-looking statements. reconciliation open which XXXX. year. Reform other this before to support opening Dan, results call measures These it expressed through supplemental can slides margin release different materially discuss performance, note for operating call, comparable risks, performance revenue the results, our our www.triumphgroup.com. achievements Certain the our within Securities known press statements Dan actions the we the statements will today then call Dan of Jim involve the be over meaning and in be statements and which website. turn are The to of Litigation on I’ll or Jim constitute will future at and on the and Q&A. on Triumph’s included unknown the format up you. is slightly posted outlook walk of provide actual During Triumph’s financial GAAP may Act be uncertainties any with measures in forward-looking implied performance that taking color deliver or to environment, expected will or of results, achievements non-GAAP from growth quarter cause Please to factors website forward-looking different.

Daniel Crowley

Tom. Thanks

recover our second systems the generated cash the did in quarter, commitments strategic our consecutive for small flow delivered XXXX. challenging demand. For Growth support headwinds are to markets free for quarter legacy from strong that end with MRO fiscal so and military and programs Triumph segment, fully and and along our freighter XXX, a early and offset margins macro core fourth while increasing number in structures positive omicron a in timing and in environment delays helped we of positioning to expected on and in

body have wide and two benefits better of past our OEM beyond on than we years we’ve and see. to commercial positioned in strategy. realize improve and what All diversification clarity continue multi-year term Triumph is markets had and near the like demand we to MRO We the

fiscal We that profitability flow. are improving guidance and increasing revenue core to provide able cash reflects for and ’XX

cash multi-year We confidence sustained flow recovery. our year-over-year. that aviation expands us also on and a in color Triumph our profitability provide will outlook gives

of XXXX driven and extensions, We recent to cost are MRO OEM XXXX fiscal as by lower goal over maintaining structure our from contract enhanced volumes, years profitability a double pricing improved transformation. rates, expanded production result to our

orders reinforces highlights. the which X, secured to in balance quarter’s In new growth. across As pivoting company, the that over we our has backlog summarize to grow. our is billion our fiscal I stabilize operations $X.X and focus On we the begun sheet, Slide year,

our XX% mix and cost benefits support margin of $XX cash slightly more EBITDAP First, we the generated flow reductions free in systems A driven lean our sales yielded working improving by million operations reduced segment capital. of and and a declined as many by favorable strong Like line. organic offset orders. shipment wide sales term order partially to body though due and increases events bottom flow MRO chain-driven few on to delays, a the our supply short in of commercial deferrals our peers,

commercial pandemic with and the key overall We the in fiscal as MRO commercial and sequentially MRO our chain supply coming to our mitigate increasing our total on OEM segment, volume the and said, for X,XXX XX% are of our up up military sales partnered ensure to is Expanding constraints vast up activity CH-XXK of That early America expect to lessened sequentially XX% especially production. health suppliers MRO affordability. up number markets the at our are by year-over-year. strength inductions, Increased now flat commercial military In and sequentially work year-over-year. and in our OEM levels actions similar X sales and FA-XX depicts in and on with while customers preparing majority transport XX% to on spot our are sales and in MRO abate on of quarter-over-quarter XX% XXXX. OEM aircraft. are compared stable are sales as and the headwinds, is Slide this in sales sales which the continuity Notably, XX% recovery increases sales XX% into Triumph’s benefiting freighter airline increased are flight QX shops impact with came of North a cargo, supply X% our XX% through mentioned shipments, and part suppliers measure V-XX for Triumph QX. to and we C-XX sequentially. both supply end and chain, of up temporary and segments. driven Despite commercial our OEM sequential the operators, a

dual conference products, supplier a with solutions, our year freight, our our suppliers, of metallic level our Triumph are purchased pressures senior and of make materials in ongoing focused two-thirds While labor commenced during and amount innovative with price these the will than along less customers over whose impact Belarus, of AI-based we The Russia to in total QX. and not do inflationary which us disciplined management get we XX for quarter. challenges Ukraine commenced fuel, sales. advanced in sales, and Triumph discussions We top environment ramp-up. staffing inflationary percent sourcing cost a the totals coming approaches, the suppliers risk with of in suspended small help and war manage XXX and last current management, excuses. one-half ahead Active both business communication, of on forecasting, held

across not similarly impacts Triumph, direct the have economy. financial monitoring small are impact revenue. The we to While impacts of global broader China is been the lockdowns Triumph closely the on material

for and transitionary XXXX the fiscal transformation that We looking a the forward our efforts. was payoff are and to through sustained year recovery

actions cover revenue drive to improve in over and year over fourth share and the fiscal Triumph is Jim? turn Jim Before to ’XX, margins me to taking more call detail. quarter to our I let the growth ’XX fiscal

Jim McCabe

Thanks Dan and good morning everyone.

offset and results positive on million are narrow again on and our Revenue from our a consolidated increased timing year, the delivery of for I earnings discuss As I reflects geared presentation presentation earnings our an this headwinds quarter. posted refer see jet was slides XXX the body in by in adjusted quarter. fiscal for press revenue the results adjustments. Triumph’s will to supplemental military platforms our Slide release explanation business review and with $XXX release results, On solutions X the term quarter business. please for our program and short the the financial cash today. Triumph please so of

$XX year continues of core and Adjusted now total ago. and revenue in XX% Our XX points XX% million revenue margin, year the generated up support Systems towards making X% all ago. a shift quarter. operating support to of a income operating up the income substantially an this operating our systems XX% percentage revenue from up quarter, with from represents

gain some sale $X overhead. asset settled Our million reductions working SG&A the costs, capital we non-cash on charge the this quarter. annuitized resulting prior and from announced liabilities as adjustments of facility on include adjustments $X a in quarter a to in $XX pension smaller and divestitures, costs Separately, pension in of restructuring reduce we million closures, of previously the million

Turning fiscal results. you’ll to X, our Slide find ’XX

our of declined and included As net MRO planned programs divestiture sales sizeable growth. while mix expected, sales our sunsetting with

full Our prior $XXX basis over adjusted income X%, year. up million, margin XXX was year representing of operating adjusted points operating the

Manufacturers you’ll close-out deliveries half structures shift sale the later this our the XXX see of point MRO and the critical margins in revenue excluding build-to-print strength manufacturing retains were results is $XXX sales facility divestiture which to increase support and over biz The results significant of year. the the Job operating systems for year. X goal higher On leaving quarter of and in the XXX income and approvals XX% years. sunsetting Slide point increases we Structures year. year XX% now contract while Required from the interiors mix Stuart XXX talent divested production and year. three included XXX Systems transitions the segment. another production and or calendar organic businesses, basis was systems source inventory a up divestitures $XX and XX% in find narrow the a quarter, along over growth, first calendar Systems million over and ensuring X% rate to site marks sales of towards customer increase support to quarter XX%, only our on jet Commercial Slide growth. up with of and of Revenue step continue structures structures are support. you’ll and last enhanced to was benefits expected of the ramp next as last systems Aviation $XX highlights. was support is of programs. X, Protection exit or revenue FYXX. government content. basis the comprehensive support and XX% revenue total Structures see of the our the our and body Turning residual program in million This million organically EBITDAP to EBITDAP year, plan. completing a contributed our for the our This of in last OEM contributes towards doubling expected close Triumph over

non-recurring interiors as commercial consolidated reduce $XX over in approach generated provides grow uses. year date. to cash rate OEM divestiture, free cash support flow increases. quarter our the Following We the sales and flow million systems continue Slide cash quarter will free to with expected the time projected for XX% and is we in X the to of walk while

As comprised previously $X included cash for shutdown flow costs. this drivers accrued advance liquidations quarter of $XX million non-recurring and XXX of of $XX losses expected, million free million and cash

a cash detailed non-recurring are a financial predictable included These on non-recurring results of steady performance. achieve year of slide. full $XXX we on Our decline as the impacts million total uses, as

horizon planning were in quarter and higher for On we year the in liquidity. $X in and positive Slide investments we debt our these forecasted over million a million cash our FYXX. with Excluding $XX million fiscal XX of segment. items, as $X were support net expenditures Capital the invest systems schedule and is our capital

strengthen to from off. had are debt, billion we efforts of the down end ago. year quarter, paying the At the of Our balance X% about net sheet $X.X a

for cash sufficient had about availability, also is our $X We than projected more needs. which million of

fiscal the lien During from first proceeds paid million year, from down $XXX by notes we our divestitures.

also extended $XX maturity from capacity $XXX securitization of November serves XXXX facility It AR We of our liquidity. to a source of million. its million low the contingent cost to as increased and

debt next years two from maturity Our is now. over

expanding continue our businesses. in cash will flow to continuing EBITDAP by and de-lever We free

three Our bank four times target is adjusted EBITDAP. leverage ratio to

were recent to fiscal the wins, on our Now and back in Dan color our factors more I’ll for outlook which for beyond. ’XX and call market end all of turn expectations

Daniel Crowley

incremental Jim. to and Triumph over engineering incumbency, ’XX in strength the recent beyond. how year and on Building marketplace and share operational of for financial platform macro continues our on our win innovative are we I’ll year, environment fiscal our IP. and in competitive a recap positioning Triumph progress Thanks wins the

we the orders noted, years. than highest in six last ’XX, of more new the $X.X As won fiscal billion in

to markets Turning helicopters, wins for XX aircraft, transport, XX, OEM and conversions, commercial to over comprised spanning fighters, and passenger cargo and freighter business Slides quarter and diverse, eVTOL awards are commercial jets. and the MRO of military

our Global existing our included awards win strategic an of IP Services, services to segments. We with conversion and a Recent XX% products wide overhaul content expanding are variety from way. by and next generate set freighter market, market finding fiscal business we are agreement on we products, the growing across references on goal and Safran for business results. and new applications jets. Boeing new to customers internal three actuators and Recall an with to passenger in year platforms another full the years, XX sales new XXXX over VistaJet Slide well

as year bill trend is X.XX, continue orders new of an is horizon. from efforts and our existing full XX% value to to portfolio than capabilities organic with the momentum. up of Book awards, planning for over fiscal follow-on more gain customers to Excluding prior we expect XXXX new our engage our growth

[Indiscernible] see MRO increases fleet on the retirements military, five reflects revenue, MRO body ago. positioned at top acquisition markets the years is most Triumph-supported of the comprise cycle. across increase strong up demand broader sales same time benefiting Looking from from and narrow of the Slide wide body budget at freighter, $XXX Triumph all strength XX, XX% now Military a line to XXXX life recent we X.X% platforms slow. appearing well Triumph’s as billion, now with programs support. on with military in DoD XX%

drone, with refueling Invictus critical and and and as substantial programs T-XA existing content Raider the production on has cycle, such Redhawk we the new the In lift trainer. future the X, as platforms F-XX, such growing Triumph MQ-XX vertical mid and CH-XXK, on supply content end, front B-XX. the On

multiple engaged add expect and components We’re more fuel, to campaigns future. supply in hydraulic thermal content near to the and in FXX

the Triumph’s versions end of few such over the this as the UH-XX, military continue tail next the FA-XX. C-XX, for grow Overall, military to to exceed end all rate. life On we keep F-XX, and pace expand sales modestly the the across cycle, F-XX, we offerings and or the aftermarket years growth platforms AH-XX, expect markets to of

have XX% activity and month upswing travel. Asia at activity front, flight XX% Europe, commercial low XX% XX% to the activity increased the Middle levels, strong XX% U.S. flight in and international of flight up XX% East XXXX over XX A-XXX increases. MRO commercial indicating to of ways: good included China horizon. Slide in A-XXX our commercial flights U.S. in the to to and flight in rebound. shows recent as orders first, levels OEM drive XX% two rate new of transatlantic the XXXX note, and despite by addition in indexed Africa, in XXX levels MAX A-XXX aisle to key rate is production Russia. of incremental followed and very twin programs Triumph global the fiscal through orders. and momentum recent anticipated the planning order revenue in rates Qantas for Airbus’ activity On Pacific. aircraft will is XXXX Of a EU for a over example increases rates started benefits contribution the second, aisle last order activity XXXX between the increased recovery single volumes, is and aisle This and it levels gaining are increased single

While Boeing over programs largest fiscal some anticipates A-XXX Triumph from MAX, increase this increases by XXX, the and are sales remains at to A-XXX low later expected and family XXX XXX fiscal to increases production collectively $XXX ’XX. Triumph’s rates, million of are ’XX year. fiscal

and jet packs doors, well. We’re which excited projected hydraulic markets belly consumption modifications Freighter demand well the to passenger drive COVID’s capacity and of ecommerce. effort. Triumph are on this is cabin as positioned conversion with from capitalize double increase insulation required conversion the are power to actuation conversion inducting in and cargo to the acoustic freighter about orders in

Middle in platforms next We and Triumph earlier will the expand Global Aerospace East, Americas, key on Over and partnerships be the programs expect UAE. last commercial partnership Pacific, Draco KLM, Honeywell the than joint including collaborations Air represented our MRO our Europe, growing to at cycle France on conversion venture we Asia called will markets quarters, content the and as won follow. generate week’s Summit in such throughout Americas, few where xCelle others competitors. with Mammoth Last, to Sine channel these plan opportunities life their and the

and to provider holding XX, systems new a company for Before guidance, has Slide Jim and aftermarket transformation. performance a our talk fiscal want we about reflects Shown the high XXXX to started company, presents our value-added I play Triumph decentralized a brand. brand from launching company that Triumph services. the pure our on significant transformed of identity by

alignment. company, reason, operating of we a solutions Triumph’s progress forward T features symbol, from name overhead and in a and better modernized internal our removed as class word, senior a Operationally, velocity. we and many improves companies sleek, of around of one Triumph’s new and layer our report now leaders needs customer this philosophy. our our continue we nod the two while segments, the embrace serve to company’s are base, operating a For to now customer removed Group to organized broad version core we the to which brand logo places we closer management our P&L

differentiated comes by of end higher where to blend we forward, ’XX move to and so This market in enhanced diversity will strength competitive re-launch on platforms, trends, a powered the and the our shareholder remain walk markets. guidance. a resilient more year is be details diversity, With deliver value we can market perform you Jim of our that levels broader helps and As wins, take complementary at as year. through products, from over fiscal now backdrop, our people, Triumph Triumph and company recent

Jim McCabe

Dan. the To the by come. let’s core, design, how stage shrunk demonstrates where five we’ve is over on the profitable improving overcoming pandemic Slide financial far its set to Thanks Triumph Triumph performance. for years and reflect past XX that going,

cost has healthier content predictable of with more the Free in to more the debt period, and more cash proceeds results than to continues the financial while future. a its conversion. while us a leverage This match but Over cash margin sales allowed to reduce from remaining improved to same improve portfolio as and base. all commercial a also business Triumph’s divestitures out we mix doubled stronger pivoted military smaller EBITDAP percentage as IP-based driving recent

systems sales FYXX within of in the aftermarket, XX% production and future segment comprised approximately segment, billion XX% Turning OEM Slide $X was military and on to XX, support the split XX% our sales and specifically sales.

in noted, by driven be is term this ramping to OEM expected As production growth segment short rates.

As market FYXX. in to a of supports between from result, we this came aftermarket. FYXX systems and XX% XX% in Two-thirds growth expect be and profitability

MRO sales to yield margins We growing over the EBITDAP expect year. just segment for XX%

improving look support cash FYXX, flow into strong low FYXX FYXX solid we we expect growth mid Systems levels segment will beyond margins year. range. to margins foundation for should revenues and As organic continue to a expanded with yield to and provides exceed XX% over year which the

Slide and anticipated assuming based full facility closure XX share. $X.X Stuart $X.XX diluted QX EPS X% billion rates our $X.XX a our the expect on per growth aircraft billion to we of year for $X.X forecast revenue to assumes organic production sale, guidance, core XX%. We of to of Turning of on pending FYXX business to which

received Our earnings approximately certain and in are and of taxes expectations pressures Cash expected to FYXX, inflationary actuarial million under updated appendix. our take interest to supply of chain as interest. refunds pension into cash be $XXX net including plan, while million, assumptions is $XXX account expense for the noted $X million be expected

impacts $XX the we the ’XX. to to capital of generate $XX to resulting million with $XX cash of expect full actions million $XX the expenditures, in For in excluding fiscal breakeven structures, approximately in million in free about year, from of core flow cash million operations

of the remaining Our advances the programs. structures actions sale closure and/or include facilities of and and liquidation

to these and facilities is $XX the with be $XXX determined. ’XX, timing are million million still fiscal and million advances be in The of As of remaining programs to legacy of to QX. in $XX nature cash to use expected between we sale closure liquidations and March anticipated in million and/or XX, of $XX have

EBITDAP pricing is actions. commercial our increases, our through our from FYXX achieved remains to As efficiencies and cost results expected primarily to FYXX OEM MRO focus of over contractual FYXX, be rate expansion, increased and continued improvements, production our by goal FYXX prior with doubling reduction

of on each over over approach our look addition, We quarterly are free forward with of as ’XX. horizon, progress of we consolidated year In conversion XX% cash fiscal planning four along on EBITDAP margin initiatives sales. XX% targeting a of flow to our reporting a these approximately we

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

Daniel Crowley

with In cash systems are in expected I’m core XXXX, fiscal fuel encouraged order and achieved solid and momentum two quarters In delivery our constraints, by pleased as margins and issues by term flow consecutive free term summary, chain challenging ’XX the supply contract enter positive shortages, our providing business. new recovery. abate punctuated environment our and and with year-over-year offset costs Triumph market we by macro strong and I’m to deferrals fiscal in us labor timing our rising of near improvement are support further being wins. Short a

value and to rate increases year-over-year. actions efforts and to value. our year-over-year. margins growth company business forward us will to of new deliver deliver of our Powered combined value de-leveraging is and winning growth, of our to support by company the diversity, flow, top OEM core quarter look structures and for to the solid I exited business this putting our progress continue to the as Our expanded while benefit further path a across improve MRO lines stakeholders. with and poised we unlock are expand having at to on our path cash build-to-print all bottom the our on the reporting hidden Pivoting

happy take questions. We’re to any now

Operator

Please first [Operator Arment ahead. question instructions] Peter from from Our go Baird. comes

Peter Arment

could Jim, business but more on that or trends a more continues the start it become maybe takes this on color tailwind as working Hi, you little and it you the company? with either mix? good does Dan. headwind start Obviously the a to different an to and neutral like overall us as it’s point year, a give volume see at just Jim seems how transformation morning capital, some

Jim McCabe

of the structures, goal we’re naturally is like coming exit the and in uses has business to are capital start to so been improvements expect our liquidation Peter. the cash with in and less years, past which the thanks the efficiency capital been working accrued, working the Working in capital. so of previously neutral core also as to to because that business it is were capital Yes, The advance It remains be liquidations, we business fund being has and for the us improving been I going then you’re moving capital down. non-recurring working forward. working because tailwind high think in coming a so that intense, structures growth past, with going XXX see that see of has ending, advances, we them

Peter Arment

That’s helpful, a as said then the the just the as you’re clarification, decided doing of the just sale? follow-up, on that--you have with you is advances, a proceeds Stuart what not of liquidation

Jim McCabe

our we’ve outlook. settled For including in advanced liquidations. just are assumed in those outlook, $XX that of reported, the there transaction, so was liquidations quarter million we’re we the not advanced In

Peter Arment

thanks Appreciate the Jim. detail,

Jim McCabe

you. Thank

Operator

comes The go from next question from UBS. Myles Walton Please ahead.

Myles Walton

for XX% Thanks, there conversion. pretty cash zero target good for not Then think this basically neutral much in year was year-on-year cash to questions the one, you’re year. maybe you implied, back I in is core does I to ’XX from the improvement Jim, Two a your the why flow? is flow conversion million, guess, said more guiding that’s what’s in what morning. couple? second, to conversely, pretty - cash just $X fiscal the versus XX% go go next flow why conversion last

Jim McCabe

Yes, Thailand, mix year-over-year flow. XX-plus remaining divest overhead some of the divested businesses. at were the change end the in of core generation a last out cash is we’re flow fact, is business and and an driver. be that, of uses, answer change conversion parts of in of which your all the we our the of Stuart going that to forward won’t like four-year there assumption that is year, of either I that and to cash then in part Working reduce non-recurring But moving helpful moving cash hope of year; Oak, a cash bigger in Staverton, number to is we There’s but capital rapidly last I thanks portfolio that’s period. Milledgeville, recover targeting think planning we’re positive from Myles. had our did Red the element we cash question. some businesses Remember lot

Myles Walton

four-year just to planning, ’XX I line it’s helpful. Yes, clarify, up a the about that we cycle? with four-year want or does different talking are fiscal

Jim McCabe

That’s our ‘XX. release. you is double EBITDAP in see I that, think to the last we just said was EBITDAP, and our going million, year numbers press we’re give to $XXX What you’ll about on continuing some

that so If piece by and of you the XXX more that’s exclude the businesses, of double to range, it’s what FYXX. other Stuart we’re to some the divested XXX looking

talking XXX period. the You’re in three-year XXX,

goes XX%-plus out to on planning conversion EBITDAP I in on our margin when was FYXX, and of more to sales, so Our horizon that’s referring consolidated or cash XX% FYXX.

Myles Walton

- those for net Okay, got where Just it go that just any point given the pretty at size us, the much can Then there? a sale color, you proceeds, divestiture or are gross? of a you either it. advances clarification would with you’re

Jim McCabe

necessary not we on yet. When transaction, we’re Not disclose what’s with but we’ll the close, just there yet the details. exact

Myles Walton

Okay, thanks.

Operator

Seifman Seth from go Please next comes Morgan. ahead. from question The JP

Seth Seifman

very Thanks much.

earlier segments. the two continue reporting expectation little mentioned guys in a to You

different core giving curious considered importance separate the of that given having the forward? it kind much structures why, as Just has business look of of gone, what’s if you’ve and the a piece going segment at so

Jim McCabe

Seth, is sure. Yes, Jim. Hey this

so is detail quarters. within aftermarket more would look do, that mean military commercial, to from to and so segments, and then more the so and investors give more that that market information in coming that’s existing non-aviation, analysts, see not in what want do, but the majority feedback of segments forward OEM, what took they think the and planning we’re to trying to want to that’s meaningful, they segments to we change continuity feedback I the market and was we’re so see

Seth Seifman

the and the Then your Okay. you guess organic is what in of are terms XXX recovery? XXX in guidance, sensitive outlook the that upcoming delta for how I what is for to in in XX% to year baking you’re thinking about or that, X%

Daniel Crowley

matching summer, then I’ll off is This jump the in. go X, the look X, used a It by rate, running to XXX, as important trailed believe the planning of month going to over to we’re softness to rates. our and eight ahead. back fiscal and produce at up then half it year, the return looking a X, contribute the now. some back higher up. we’re to this won’t horizon, that the sort chipsets and and but maybe to a keep now of It years path you recovery I’m our about XX is many their at of Boeing in achieve see month capital XX, month Dan, in that back so programs we XX needs, We Triumph. the to it’s to to confident we’re the the make way It’s ’XX. forward build a We we happen part one to rate right second de-rate XX X.X to of of a but working month all even we sure stepping that did going certification in latter last the rate getting Boeing

Seth Seifman

Great, thank you very much.

Daniel Crowley

you. Thank

Operator

Again, if one. you then star have a question, please press

comes Sheila from question next from Jefferies. go Please Kahyaoglu ahead. Our

Sheila Kahyaoglu

you of Hey, there I that has XX How good bit. could for you morning Thank business think talk do and guys. and putting upon even for rates and you XXX a rate wanted for business? those know we MAX. just military, Triumph’s assumptions about growth I what your time. sort to the changed think out planning Thank the commercial for for--you form. the know, you about maybe about as growth are Slide touched little market

Daniel Crowley

our to Yes, what narrow the directors show can we - in outlook, and freighter chart military, on commercial provided one similar to what it’s multi-year shown although of body, body, this We board do it’s wide well. chart, underlies market as not whether Sheila, our it’s to the put thanks.

today, is they our MAX, show body if aisle, what think solid recovery. with planning with despite of starting a over looks it’s the certain is putting in mid-XXs it’s--the we thing that we variants growth ordering - and and is achieve Our suppliers, horizon look Twin is the tier is single operating mid-XXs, chain rates labor, aisle their one at you of only it XX% rates XXs, our Boeing horizon. of way down build high going it’s challenges you headed capacity but fastest of at rate we the of recovery. of from get outlook, have because XX, you get composite Same companies from a - business are Airbus planning up above on the rate Airbus’ the place these CAGR four build some reason because robust the on we a ready, into Narrow certification lower rate the a segments. MAX, like good low are so rate message see growing it’s even into doing still your supply was over and it’s we interiors and these so very calls of in

revenue term see recovery. its in B-XX, the You expect XXX, growth show is that from demands strength additional Sikorsky can introducing we well. sign probably our there. but what’s the will to a so--and then a programs as but workshare XXX for most a be rate lot so goes legacy will then on although encouraging as at there have with benefit chipset it’s - down level, and continue, a the production may freighter content that Military, not even and pushed to be we we in we the have XXXX on going flattish F-XX, encouraging lot, through see we the more the rate XXX, of and the high up so if in we that, come is on we’re are coming content will A right, segments, so counting role is see CH-XX, fighter us. few the XXX program we’ll the back it MRO low big legacy demand short

because the the volume, X% they’re not big both X% the the say is a month market. to this inductions, really and composite up, quarter growth, further, was bodies digits our XX% an so nacelle double seeing and market CAGR seeing induction. X%, month retiring to know, in inductions single of in trend it’s their those X%, engine over flight accessory wide I - Although I’d as growth they up high across think, rate overall digits so rate you month, low maybe this we’re we’re any is encouraging

Sheila Kahyaoglu

look for, to what past just about mostly follow-up it’s incremental Slide think on or Okay, to How seems we new that It should list opportunities out those year. like XX over and do out on had maybe you wins now. you’ve basically? of defense What we a for the a watch that, business for? have the side

Daniel Crowley

years is These the products feel good strategy so place the build actuation. then Yes, or encouraging a and our these life a we wins, chart there’s about put we that few of this have defense what’s of or good we’ve whether of MRO through replacement IP-based frequent wheel about design aircraft, tail. hydraulics it’s and in and are ago, many the amount steering it’s nose products

to with and outlook side, last for LEAP commercial expect orders met We the recover up. On LEAP. they’re about go very as the bullish we that GE week

seeing this We’re the we that so pivot to freighter more in freighter back in expect market, conversions, orders to we’re seeing commercial but military today as mentioned, time.

Sheila Kahyaoglu

Great, thank you.

Daniel Crowley

you. Thank

Operator

Michael go from Please next comes Truist The from Ciarmoli Securities. ahead. question

Michael Ciarmoli

sure taking for free in cash to elaborate of and $XX Jim, year, morning so, that? higher than there Maybe you this expected. maybe $XX to to to cash million on used correctly. just Is back want good the It I if closings flow, Hey, guys. Thanks additional make I be can question. heard seems facility you million

Jim McCabe

the it Yes, a to before wind there are we of divestiture. supporting includes cash non-cash--non-core expenses It are the intense that lot the is programs, when group like $XX million and programs would Structures to legacy for also divested be in divestiture dedicated of uses, that completes. These down. business, capital a to structures case $XX close-out had to XXX. relates complete like things wind use and infrastructure that systems infrastructure. our the are the that related forecast previously It accrued of are--businesses teams is the being and includes up, million IT

Daniel Crowley

is bounded, is of it’s scope last are timing. this Michael, those the This the These know year. it. the and run-outs deterministic. We both

Jim McCabe

but to forecast actually a more reduce there’s that will for to it risk than there had opportunity put baseline. the we is increase, that And

Michael Ciarmoli

I a maybe disclosed time and I under seemed XXX at impression, end the Okay. bit higher. this it was were first that? of looking the little just you’ve the Is guess, the we maybe that

Jim McCabe

ended up year Yes, the goes XX but beyond production. production wind last

the for any haven’t coming specifics year. We given

is years the but for from is Some schedule this that things the presentation. this the the of of in outlook as year. It’s longer, deferred taken have back reconciled previous in

Michael Ciarmoli

look and on good growth last small level next to be, can’t in XX% wrong, thought at that around Okay, and million, growing, $XXX or the out structures on--that to Slide be got is in think year? just structures called really what’s out have make you’ve what’s systems the the if that’s of XX%. pretty what running seems XX the there, always but going implied got we then I I one, guidance I I you you’ve business if number. the-did at to that support, a it the million, interiors $XXX was interiors and that mean, we

Jim McCabe

contract It a from It’s It backlog bodies, so indicated, won. last secured and level. business faster of is recovers, it new in from that because as lot it’s with big that year. relying growing, was it on just A-XXX continuing Dan a programs that work, growing new got narrow is like particular just XXX, grow, its as it will

Daniel Crowley

on supporting volume aircraft think of that and X,XXX a way horizon. MAX [indiscernible] that be so it’s that, pandemic, of cut, is we the efficiently more the did went before. At the it effectively down over driving profitable We it in a recover. plan planning for path did than signed aircraft, of great double with to did which a went and and in now had of narrow business over half their although We’ll team Mexicali our with to just that will XX-year down difficult, down. The do we less initiatives, It year the year. that expect the body and we aircraft, great employees more experience, all a right-sizing A-XXX, through and going we Boeing to business, job I were than productivity peak,

Michael Ciarmoli

is it X.X is and consolidated about be run just a to given systems to is $XX so basically next Okay, going rate X.X? guide year, million the million and to support $XX X.X

Daniel Crowley

get you firm give numbers. Yes, to bit that’s and a back Why the don’t little we low. you

Jim McCabe

That includes is On is X.X guidance, guidance. as the well. Page consolidated our so interiors XX X.X Mike, to

Daniel Crowley

Yes, it should on revenue. north of be XXX

Michael Ciarmoli

it Okay, the Page shows page, it offline. right. on with out figure chart TAS. Thanks that trying Yes, GSS and We guys. I’m can to prior just reconcile the XX

Operator

The Cowen. ahead. Rumohr next question Please go Cai from from comes von

Cai von Rumohr

assuming know one-time minus-XX full the also include a guide are includes would number that million the pushed thanks flow might so ops, the that be out? wind-up. that much. from your I Yes, Does it capex, guess Boeing, is so I for total cash XX. XX be you $XXX or negative

Jim McCabe

is assumption not guidance. included transaction. It’s resolved not--the The in in that is the that’s liquidation XXX

Cai von Rumohr

this debt? not basically--just how do So in so taken included? negative. out you’re be so not much. it’s is to available still you the going It’s It to all think guidance, like understand, like much reduce net cash It I sounds of of sounds

Jim McCabe

cash flow exact be the not to in moving through going that’s advances there improve giving and reduction as mentioned transaction, value, we but will forward. earlier, value the the we’re of transaction Yes,

You that’s portion the XX. XX and can of XX, - use, to proceeds so there’s the satisfy see used after the zero of XX in our will But to of then XX, be detail, XX correct that advances to Cai, on the substantial to generation, the XX Page assumption. a

Cai von Rumohr

debt get due know, So of you once have thinking the this, through and of substantial What’s what deal in all about--you part to latter coming how that? going you ’XX with ’XX. your you’re

Jim McCabe

years The maturities away. debt over two are

execute a of position and rates as We our have monitor - all is, continue continue have but and forward, fixed over so reduce to most rates on and better we of better to moving good and EBITDAP improve interest in is leverage, fact, right markets we be to our substantially now refinancing two it we’ll we years. get in the debt

Cai von Rumohr

Thank you very much.

Operator

America. question ahead. then of a next Again, go The please from if Epstein Bank comes you star press Please Ron question, one. have from

Andre Madrid

actually to Hey can bit - guys, that XX. to Andre been kind slightly, just back you go going Slide the XXXX? Boeing, touched it’s team Madrid continued on projected these and just those at about I this Wanted all XXX that what actually on, seem rates makes hit a with XXX, aggressive, objectives but of pretty is I to talk Ron. with through know want I for issues ask wanted on on

Daniel Crowley

talk basis. a both on Boeing daily their latest schedule releases. and get We directly Airbus to We

forecast step-ups. if the We the to commitments near-term on to also watch first That’s meeting companies and the orders both rate us matches orders, the see have thing. been actual their

It’s there’s I to they what got great my the they’re it plants, through with great step-ups diligently leaders overdone number on been the supply think MAX they their time chain, over with Passengers there’s the They helped greater different our demand know a It’s we in not required. The on for with out will same opinion, appreciate and place it happen in that, doing news think love of confidence has that. it, service. so dealing on to their need views but they do certification FAA really market, know X,XXX I commitments XXX, Boeing do what’s and credit will for we having and be may Boeing honored there it. coverage efficiency. there’s for be XXX talked rate getting on It’s in in but--. the recent that XXX. the a personal and is submittals. working airplane, around we the fuel XXX a have is and the it. coverage, there have in

Jim McCabe

is to and third a meaningful of it’s a our confidence, a so ago. mix commercial rate business is commercial of It be piece a now it up to now--one-third our so our a business years our our was only military it’s XX%, to up couple part to aftermarket. is but than still quarter addition business, of changed, in we’re also business has of Dan, used smaller

Daniel Crowley

get with but at Yes, and calls their along and of chain that third so the--we’re I story rate increases, supply Mobile they those the step-ups. will on we there. on a really way in opened will and them think upswing, supply readiness nothing in pressing, same there Airbus, line rate about constraints probably be the on saw support rate quarterly impair you some They’re

Andre Madrid

that, you portfolio up, seeing see If helpful kind for five can how opportunities other work are and XX% down years said I out? of programs the shaping about on military on do color. you. maybe you Thank line, side following legacy the well, the that’s actually up now. you of guys follow as the Okay, on exposure What and new

Daniel Crowley

not or or readiness that’s Well, platforms demand for the we on products, out. materially MQ-XX, and up, if well. new conflict starts, going is years future reliability affordability as as our they’re coming a is, can it’s translating into are I’m for requests T-XA common, they high Ukraine incumbents, vertical F-XX we the Triumph a the certain whole the say and what space, platforms, and for to in of war gain area continuing in rates We an given want OEMs month. by career, lift although more of have whether and DoD and so five go handicap for MRO to even What encouraged development and to they’re the Then to their not ensure that my those be all component area view a I’ve we we the worked the or workshare, defense defense say I’m rate spares. even solid if challenges, the per the has expect either the these component competing where the don’t share as go we as I can expand business on to is through which see issue triggered

confident time. military to grow our business We’re our in over and sustain ability

Jim McCabe

too, aftermarket gets sales. gets more And military an we in when military component valuable which have into it foreign

including life us and more aftermarket, the We makes in the predictable throughout that and balanced. have products cycle, military

Andre Madrid

Thank All awesome. you that. right, for guys

Operator

Noah comes go question ahead. Sachs. Goldman Please from next The Poponak from

Noah Poponak

or the latter part of is in higher rates the latter think the morning happen Dan, Hi, in the of of Boeing you part and achieve summer. summer, you you certification latter the good you’re and rates, return then will everyone. part to will think is the on summer? the the certification move Do stated the higher said confident that to that XXX, you in

Daniel Crowley

the see the if view, underlying the specific that I’m goals, giving no the I for are that which as and and to timing, you supplier there’s XXX platform, with that on guidance, Boeing rate. I is to because the demand back going of just overstated what we take of in coverage but multi-year just the Boeing won’t has closer comment they their up events. for those negative, think speak back. to doubt is long a on presenting to timing on the you be opinion won’t certification my achieving been the our coming rates we’re I the

Noah Poponak

the your have laid that the versus a or nine recovery about index an be I that that On best side. the from Is ’XX, wide a than to ’XX. your month, math indication there substantially fiscal guess? That’s the in would and faster the rate market most on the fiscal body calendar ’XX, out that longer expect implies OEM is you view, think

Daniel Crowley

out, orders, a month, you I to a think but higher it little as and Yes, it’s states a be mentioned, our estimate. I a bit than on is see as together, rates seen The I how rates that, for as high of XXX. backlog at rates so are do they prepared that that will plays Triumph lower we’ve and but XX going the produced, it’s platform is have Noah,

Noah Poponak

that the--you’ve would looks we’re pretty is looking I your got for to above were what get recovery X.X your fiscal ’XX the month is Okay, they fiscal pre-pandemic, on you healthy, compared pre-grounding to all ’XX, the the pre-pandemic, a which the calendar again XX and then on think that you chart, also then could pre-grounding, ’XX for. which elaborate it XXX because if XX, in index that ’XX, at, fiscal

there? details can us you some MAX give If on implied more numbers on the the

Daniel Crowley

that doing it of going and recall. of Yes, we’re really territory, than range go off for was We pre-pandemic, thinking higher it’s was so I XX planning that course, we’re so XX I’m to jumping rates think from, all a were to you then point would as into getting they They pre-pandemic. to beyond that, our pre-pandemic back XX were thinking be Boeing it where were the fiscal speaking in rates--for giving XX ’XX, a month forecast. but in not headed our and have in there is is thousands good purposes, planning forecasts market within think ’XX. platform in out very the sort once out our Again, get to so efficiency, pull lead what procurement of and also term there times we those shorter Boeing because that a through they strategy fuel There’s we they about of go certainly certification. again aircraft rates achieving its in are there so for backlog, a is buy, ramp-up. know their demand our

to You on change That de-risk want do support everybody capacity helps adjusting, their to that. are to that it so coordinated way, is ramp. steps a in and rates that manageable the in moving

Noah Poponak

Interesting, okay.

Just selling into. one what on you’re more

MRO incredibly seeing your You you if provide body is little that off a of an Maybe that we better base low mean, or there mentioned - think? business? just I are piece wide up. than color could that picking of in more is you What

Daniel Crowley

The passenger very is freighter conversion encouraging.

calls, do accessories rates numbers at step the how plus of a it’s board showed effectively on we we I’m reversers don’t after--and the and fairly steady the--I engine conversions, and Jim want sell We actuators, we sell get insulation freighter I’ll well. after and then that suddenly hydraulics, go give do the to much - it’s year thrust encouraging. those as rate, high going numbers, cuff the that’s the up to a have over one-on-one for so year our We we a a up increase chart going rate off on non-linear to but

of to for freighters, you that I be I’m growth, to I’d and the and will products, between a parts lot with On you would moving if leave track GDP on going you continued to but unending refer them. Airbus Boeing, there’s for going wide believe so. to that body I, think There’s demand demand the agree ecommerce the OEMs. and and that,

Noah Poponak

outside body just the seeing you course aftermarket wide are What normal in of--? freighter of conversion, your

Daniel Crowley

retirement what years, of that’s saw largely wide slowing. the were they--you huge and year and thought two continued was we a bodies, we downdraft know, be grounded bodies where there Well, would last last wide

international back and XX point have and There body service they slows parts growing just back and fuel cycles, parts, get we’re both bodies the to us up legacy back so time-based them for into hour and has the they that they’re replacement of I to the didn’t ordered lot come coming wide in short but two demand, term, the mentioned these them replacement meet much wide years. how they’re picked at days, in last into A that retire in ready. be cycle-based As derived benefiting. flying get to put play a may those, and which ordering more travel prior they efficient

Noah Poponak

so thanks much. Okay,

Daniel Crowley

Thank you.

Operator

Our from Myles last question Please Walton is a ahead. follow-up from UBS. go

Myles Walton

Thanks, your that’s you’re Slide I at is of just is and fiscal to million-plus indicative $XXX into the I reconcile and it One, of to clarifications. look in ’XX putting revenue if sales that XX, analysis? growth the that against bottoms-up that a offset couple guidance, what’s when not, that XX segment implied guidance versus Slide try what your implied,

Daniel Crowley

of volume year, expansion if first three $XXX over sales revenue. these it reflected in million reflected red the over sales in going on are It talks contribution, XXXX guidance. ’XX so to line, is of rates we call our million the time, horizon volume, about OEM our next dash you in a is see because the year how in year incremental volume $XXX benefit The new order sales us that, it so that

Myles Walton

X.X of that million $XXX X.X Yes, to organic growth? includes

Daniel Crowley

Yes.

Myles Walton

another fiscal should then about? and in Jobs clarification, benefits that we Okay, know Act ’XX American any Protection

Daniel Crowley

portion it. There a of small is

think I million of more about $X QX little in and cash. maybe it’s recognition, in a

coming the cash think in X may XX. or I be

Myles Walton

in have that and just ’XX to then ’XX fiscal or leverage four-year a it, three-year or got your either share? a targeted want one quick Okay, your you do Jim, - you’d

Jim McCabe

FYXX, we planning so Yes, four three EBITDAP the end our four period, of of bank to three the to adjusted at target so times. times end

Myles Walton

Okay, again. thanks

Daniel Crowley

Thank you.

Operator

pm This Group’s answer and be our have am replay XX:XX will at through quarter XX:XX earnings available at Eastern will X question concludes XXXX Standard fiscal Time Standard call a conference year and This fourth June Eastern today Triumph call. session that Time.

for or You entering XXXXXXX. by dialing can code access and access the replay today’s attending XXX-XXX-XXXX, you presentation. Thank XXX-XXX-XXXX

disconnect. now may You

Triumph (TGI) 18 May 222022 Q4 Earnings call transcript