Earnings call transcript Q4 2023

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Operator

Good morning, and welcome to the Triumph Group’s Fourth Quarter Fiscal Year 2023 Results Conference Call. All participants will be in listen-only mode for the duration of the call. [Operator Instructions] Please also note that this event is being recorded today.

I would now like to turn the conference over to Tom Quigley. Please go ahead, sir.

Tom Quigley

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

the As to please website morning. the results our refer on quarter, we posted financial review this the for presentation

will our results. adjusted We be discussing

this of results, press Reform XXXX. Our cause call Private uncertainties, Certain are Triumph's explained involve or measures adjustments comparable implied or performance, from to to forward-looking and GAAP may presentation. within statements and performance, results, any and forward-looking Securities unknown the the constitute different reconciliation release or earnings achievements the measures achievements expressed statements These risks, the forward-looking in of the statements actual be on Act in non-GAAP which future other statements. financial expected of and in factors, meaning materially known any Litigation

it Dan, over turn I'll to you.

Dan Crowley

free growth, fiscal in encouraging on solid fourth beyond, in full-year as company We XXXX fiscal profitability, targets, expanded generated and for XXXX Thanks, $XX the cashflow. Tom. or that marked exceeded was quarter, year fiscal both million sales year met and and finish in and organic positive delivered earnings success positioning with Triumph QX an maturely strong demand and cashflow, cashflow. a QX financial ended in free positive our margins our upswing, an to improvement year-over-year accelerates.

doubled to in under in ‘XX X% two XX% Over from Triumph our XXXX. years, our adjusted the margins EBITDA past fiscal fiscal

expansion capital a beyond. in consistent liquidity priority to as Triumph maturities, value demand our a seek are we continue extended we forward, ‘XX flexibility to debt enhance top and in our fiscal and improving fiscal expect ’XX, over to cashflow to go we providing optimize and generation As growth guiding additional rapidly as We structure Deleveraging margin to further topline momentum and time. environment. shareholder as in we recently continue remains returns this

on remains strategy four-point Our track.

as And Two, company. improve operations and the the margins. company, return help to sales delever reposition proprietary systems cashflow and four, is which Triumph company Three, aftermarket free First, and the to peers. larger result as a and investors our shareholder our company against valuable us aftermarket successfully positive returns market our and actions, grow we've the generate done. expect. in a stronger allowing to compete of the more today

the for Turning to Slide I'll quarter. X, the highlights summarize

sales development lower year included the for tailwinds costs. mix. as with XX, all SG&A of OEM Profitability QX volume revenue result we sales accounted to increased for basis, organic our levels. in a of year XXX, aftermarket a sites, shipments, sales, quarter, sales the reported the materially previously prior XXX program On platforms, by of sales, sales higher was while that and our from and quarter for GE improving fiscal gearbox All year growth First, up generated Boeing end at across for increases, overhead expect and our Note execution MRO growth included account demand. markets. both LEAP prior achieved strong MRO overhauls, profitability we drivers increased XX% our QX improved for Key military margin fiscal the and driven growth and and drivers on negotiated to and of Year-over-year which continue Cell Key XXXX our OEM transition since commercial highest exceeded XX% business for the percentages over spares the ‘XX. year price years. cut-in prior rotorcraft, programs higher higher spare on We production, military XX%,

as won't to across encouraging primary volumes we from Our all higher leverage. actuators support cost here lines across In controls, product we operating is have support. and from customers our add our our traction backlog increase. and reduction results product words, representation benefit to What's end engine other gear efforts. are customers, We who our boxes, year-over-year, grew enhance our EBITDA gain platforms, back as to Triumph cost continues differentiated saw to by solutions as markets, fund margins R&D with broad our XX% our helping to

diversity, changes, investments our size, rooted and and in portfolio pricing improvements in backlog are initiatives. technology, new products Our and in profitability,

in secured businesses, sustained In addition Triumph’s renewal to backlog our key growth. which long-term all long-term agreements to the is recent across we years

the us Beyond supporting XX% market and from rates new exceed our space markets. enabled war of higher goal OEM and MRO Ukraine, and our sales generating wins new to in for the in products products receipts, of

positive cashflow capital. free collections, over cashflow Turning product benefiting to working million free in end as strong we we QX, $XXX the from accelerated cash in and in year, to generated cashflow, reductions shipments, unlevered

while capital track working funding commercial We CapEx on ‘XX of expanding are beyond, cashflow a and to full-year free in fiscal investments generate and on basis ramp. the our for positive support

Taken streamline highest encouraged supplier levels XX%, financial establishing We from by and percentages reduces the production and defects improving on-time orders, teams free together, commercial rate last aircraft Similar captive across ‘XX kilometers for operational injuries performance both over The performance primary revenue this fiscal than sites to spend. the in both guidance. of XXXX mid-XXs year. global poor a OEM exceed zero revenue from markets levels XX% in to reducing reducing Robust quality, year XX as enterprise, including of our this fiscal levels, the sales. less Triumph’s will programs our achieving year. from increases, red MRO our benefiting MAX-XXs, high with of alone, for in end of the the of our and of benefiting cost XX% XX MRO sites the low recording to markets, $XXX our international passenger benefit pricing recover to backlog, commercial on factories made Airlines. with body and to XXX for is XXs, half execution, Triumph Triumph continue by improvements, in inventory. lay our million the track foundation XX X% recent are quality pre-pandemic the that contracts operationally achieving to United or calendar MRO and increase remain in those helped levels driver risk, expanding which delivery increase our new world-class XXXX growth XX%, demand new levels. XXX year, Ryanair's order Six is our in momentum year strides safety from and XX%, great over including bookings March world-class travel wide up

and year. engine Important military for million content included fold shoot the X, the quarter winds blade $XXX million for F-XX Slide and for on to including the Turning coolers, new an actuator. damping helicopter, totaled wins oil and drag blade $XXX and system the the quarter CH-XX

We our also higher is received to Boeing biggest Triumph growth. of large bottom-line production eight Increasing steps rates a ahead XX OEM times. up to forecast that volume lead for the due the months to our top typically order Airbus recall rates, and for Howitzer Magazine enabler MXXX components. product continue and OEMs,

per from increase by step MAX rate move plans the before Boeing As quarter, XX rate with move interiors the to A-XXX plans fiscal door rate current or the anticipate six. the X.X to A-XXX. current and XXX rate X.X rate to rate our Boeing rate the this the hydraulic to March. in summer, year. month and system, XX four A-XXX before entire from five, Recall Airbus then from the from The will XXX rate achieved the of end XX supplies floors, gear Triumph rate XX A-XXX current fourth On shown insulation, fiscal that within Slide to family to system, cargo XX and while we Triumph landing to mechanical on X.X components. March, to Triumph's cabin the then X, move Airbus actuation the XX and XXX to rate our also year. supplies rate controls on will

military helping Regarding results. up military signaling ’XX, approximately and rose were stability such the US with budget is sequentially, year-over-year the fiscal ‘XX CH-XX to years. as drive up Triumph’s total XXXX and next request sales the $XX outlook, the another billion our XX% $XX over platforms the billion, two demand defense XX% in

and and ‘XX guidance fiscal repair, up components. over overhaul, Finally, XX,XXX these business and XX% to support are military long-term MRO commercial maintenance, increases OEM across aftermarket our platforms markets, for across and all Together, year-over-year inductions outlook. end our

good to efforts. our on and update So, systems overall, an to to very development news area importance the efforts demand I generation product share trends. want its value proprietary our in relative

fiscal approximately MRO third-party business. products, our for For proprietary ‘XX, of excluding sales our are XX%

development maintain and Our investments, product technical technology, so property, staff customer are that needs. intellectual roadmaps product directed towards emerging robust

their By augment million self-funded contract challenges, most development the as well over takeaways We commitments our are targeting received new XX customer and our solve on partnering in programs. with starts to months to we last $XX existing research customer-funded in R&D. as difficult

X, Slide can to the joint results positive some of Turning you R&D of efforts. these see

accomplishments close along None aftermarket our was sixth potential. XX years been our the market growth members This Triumph’s systems, have and the to our new include our all compressors, and through its applications of LM with execute customer ‘XX, for financial are identifying to future engine positioned vapor with would've Together, this Triumph helped landing are the controls, key to sustainably operational company who expand the new enhancing by the long-term gen engagement our team company actuators, solutions engine, growth, pumps, New created boxes, possible takeaway it and fiscal to us three fighters. made to ‘XX particularly backlog. for value. gear military without I'm shaping next-gen components, last and to thermal the we've teams end and cycle GEs in opportunities Triumph engagement customer-focused strong enablers to military make products and NX strategy proprietary achieve years whose requirements electric possible fiscal aircraft happy manage profitable in culture and demand. come. gear fuel at hydraulic products possible content fuel valuable on

through detailed now fourth the take ‘XX. quarter and fiscal will Jim results for us our Jim? outlook

Jim McCabe

fourth morning, $XXX our margin good exceeded results revenue over X On growth quarter million. and the Dan, are results Slide prior the Revenue expectations, significant the Thanks, and quarter. period. with was for everyone. year consolidated Triumph's

along our EBITDA exited sales end programs representing continuing XX% XXX all and increased of basis divestitures organic in was year was quarter. the especially for Adjusted $XX with largest operating markets, pricing markets. the quarter aftermarket, the EBITDA basis-point the year, for significant business, from points is and prior full-year higher fiscal benefited representing for our higher results year margin, which We income improvement prior ‘XX the XXX reductions. period. income XX% a all cost over period. were was Increased organic margin. Adjusted growth margin, improvement prior over a programs, increase driver for our the with Triumph’s revenue and the also $XX from in an the XX% over quarter year a million, excluding For over operating a million, margin XX% demand last key strong, in and

billion. are $X.XXX On was consolidated annual Revenue the Slide X results.

increased Adjusted prior year. continuing point up For year was is prior over XX% year is was for the EBITDA million, XXX-basis margin, operating operations, income for million. a $XXX prior from the the a EBITDA over the XX% XX% which XXX the That increase margin, organic operating revenue year. year. Adjusted and the over $XXX points basis

reflects This to name Our following as completion efforts reposition please press the release, our segment ongoing known of attached segment formally structures, interiors. accurately that segment. and note tables that now is focus change to of more the business, the are called the the

We made, would from by benefiting forecast. is interiors strong encouraged and note have we are a the backlog progress and growth that

over aftermarket include military, our end expanded to disclosures OEM last revenue under year each. market, commercial then also including and We the and by and

Slide market our XX commercial revenue. shows

Commercial to $XXX ramp. quarter, volume of and the This by continuing as aftermarket strong travel were programs, business in $XXX in was and in XX% air the million growth revenue. and grew both million demand price of key the sales Commercial on has grew XX% For XXX in XXX total commercial programs. including increases Boeing continued the driven was revenue continuing XX% business. commercial sales OEM

Slide XX shows our military revenue.

to military last profitable quarter, business, of total OEM XX revenue million sales market. of in the For about chain and quarter. X% of as growing and The non-aviation, is $XXX is revenue. which Both grew supply compared our recovery of million representing a aftermarket benefited revenue remaining XX% year, was military revenue the this

having is aftermarket prior quarter, sales XX% and towards exchange margins sales In our Our revenue, on XX% positive the represented aftermarket impact year. total up a of in cashflow. from the

expect contributed change, fiscal to demand and actions and trend this both have we growing this through Our portfolio we positive move our to mix as aftermarket ‘XX. continue

XX. cashflow Slide Our on free walk is

net the quarter a of sales capital, $XX generation this $XX by line. in our included quarter driven working million reduction cash Our million fourth

the we As improve, we've been supply inventory continue carrying. chains to reduce been to have able

We payments our timing refinancing. also incurred quarter, the an of in additional $XX million in the interest due

Slide net debt On XX our liquidity. is

our $XXX financial had portion to the was enhancing extended first that fourth transaction maturities to a we mature ability a substantial these premium. in just billion debt, liquidity, During debt, of new series of we approximately retiring additional lien including of at At notes cash $X.X of quarter, and availability XXXX, a X% refinancing our to were under due of issuing those completed notes providing portion and flexibility, new two notes net This the prepay ‘XX. our March reasonable million. XXst, the

XXXX. over two be used from outstanding to this bonds million warrants proceeds currently are our debt. retired $X stock to for from now of designated these exercise the In bonds. maturity bonds received due we August of next years Our million designated $XXX and warrant in that notes of quarter, can exercises, the These $X million reduce is of

$XX grow we and Slide non-aviation is growth revenue driven of on is anticipated the family. businesses, continued are programs production at XX% sales top chart We're is rates, this ‘XX internationally. to driven X% and XXX and for FY exited fiscal ‘XX approximately production of XX. increase, our travel right a expansion A-XXX at work the as is by by the the and top aftermarket sales largest of shows expected expect million domestically Commercial positive and ‘XX from Airbus begins trend. air on increase previously Our of supporting growth Adjusting last our years an guidance Howitzer such OEM increase, bridge by driven rate, guidance solid in pricing, to overall to of X% FY fiscal to The The XXX, over aircraft ’XX. left. revenue FY followed fiscal on expected based ‘XX the in ramps ‘XX. EBITDA the volume announced in The by to Boeing volume, and sustainment. OEM revenue. Aftermarket organic Non-aviation component for three proud growth

terms Our ‘XX, margin ’XX, has margin a expansion our driven from the from XX% last free of guidance our in in adjusted reshaping OEM ‘XX. to portfolio, two of increasing ‘XX. XX% and from the X% fiscal in indicates fiscal about EBITDA demand fiscal The number XX% in chart in the fiscal operational has our for to EBITDA rates, and shows aftermarket. contracts, the improving margin in improved ‘XX EBITDA ramping by cadence cashflow left aviation been and bottom and fiscal increased efficiencies, our to of quarterly up including a improving anticipated higher pricing The years production cadence consolidated a key factors,

with working second cash including ‘XX cashflow first to support to fiscal in normal higher free bottom resulting is half. free seasonality half unlevered our free chart capital deliveries right ‘XX, our generation cash in in the bridge fiscal interest. before shows expect to and cashflow the from cashflow ‘XX, growth, generate fiscal which We The positive using

‘XX, As previously included million net working noted, improvement and just expected anticipate over working We is cash driver of is over unlevered capital a fiscal which ‘XX cashflow drive largest $XX free non-recurring million improvement. capital fiscal in growth, and uses, half increases. earnings modest the net in to $XX our

Slide guidance. to XX, fiscal you'll ‘XX detailed find Turning our

to of X% from continuing billion $XX the $X.XX growth That's $X.XX operations million. XX% expect to to After $XX million We and business, million $XX to revenue of cash billion. in we ‘XX. expect free capital in expenditures, million million of of to million generate up to $XX FY fiscal to $XXX million ‘XX. from That's cashflow $XX improvement cashflow free $XX in

be is $XXX million interest, to $XXX We EBITDA, up million Interest a $XXX expect $XXX of margin. XX% $XXX expect operating and million cash taxes. expense adjusted and million cash expect EBITDA to of including of million income, we representing of million million, to $X $XXX to

contribution pension that few the ‘XX. years. the so as used would the to required Page Our FY the $XX contributions past note We elect significantly past on in and XX. can estimates change year after the in do stock required funding We've have is estimated may first in we is seen million forecast for future. in

summary, positioned and systems aerospace In as strong it extended company. one-time free was We expanded to solid a a with clearly items aftermarket our cashflow. and finish years. and are year than fewer grew past and actions revenue, completed margins, our improved portfolio debt maturities, an We

revenue, increase to For margins, plan fiscal and and continue grow we're our executing on to on ’XX, value. focused shareholder cashflow,

the look and our multi-year an Investor Day forward for are at targets to bridges that and process We fall, planning in in the time. sharing

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

Dan Crowley

our performance in XXXX improving in a the fourth We underscores demand. that profitable targets fiscal larger entered quarter that Triumph's ’XX. and a and ‘XX customer portfolio we're Jim. and results aftermarket-driven accelerating our Thanks, fiscal with and backlog year-over-year systems stronger with of are financial and fiscal optimized more programs, time we a set at businesses, of products, an steadily towards company,

of increasing and gives our aftermarket in sales, confidence IP-driven guidance and long-term outlook. fiscal ‘XX mix OEM us Our

Jim have. and questions to any I happy take you are

Operator

your Sheila question, We'll question. will first from come take go Jefferies. Instructions] which Please Kahyaoglu our ahead [Operator with with

Sheila Kahyaoglu

you, Thank Dan, and much so morning, and good Jim.

That'd backup can Excel off, behind could be Slide if First great that slice. the get XX? we data I get first

wanted your those you'll about discuss significant fall. maybe numbers ‘XX cashflow in of - the super fiscal you but items go there, those so mentioned guess the do terms appreciate supplementals, because the headwind to think next that's in becoming in slides, helpful. in pension how to contributions and So, I the the actually I I something of slide context generation, we a free the that's with

Jim McCabe

Yes, year, we thanks, I'll know. only because as had an year It's returns. know, you dramatically the And $X last matters I million because market you is forecast. after per or on last Excel volatile think the time funding in that can years. so next out only interesting But conditions, that let the that really spreadsheet look rates, year dollars Sheila. interest And pension change based one it same at and for it's year,

focused on coming So, year. in the the what $XX we're million is

$XX look you on sheet, it If up the about from at liability balance pension the only. million went

went the up So, funding that. but lot than a more

it to before the we're with we do But year. which ‘XX, consider And next going the million revisit some we're $XX has elections, for. of deal planning and have which with, to in fiscal to

Sheila Kahyaoglu

it. Got

Okay. as just X.X% - the is And that of you then guys best one Is quarter. the that a follow-up be in profitability? This you interiors the of sort should we baseline like Adjusted quick on guys EBITDA mentioned, the the of margins margins. for quarters had. thinking

Jim McCabe

the just repeat you said? Could number you

Sheila Kahyaoglu

adjusted EBITDA the Oh, X.X% margin. I believe was

Jim McCabe

Right. we're doubled year. right? going The next through margins improve are to the we've went Look, improve, margins up So, going projecting EBITDA from without through I increasing margin, leverage and business if the are revenue, to margin on continue to to from - fixed additional expenses. seen to in XX% and X% continue falling consolidated XX%, to across got gross you've which

all the trends are the markets, So, in including positive board interiors. across the

Sheila Kahyaoglu

Thank you. great. Okay,

Operator

next will with with question And go Peter your come Baird. question. Please from our Arment ahead

Peter Arment

for a Hey, strong note given details have finishing congrats all year. thanks. you up on the on the Dan, on thanks just Good guys and and Jim. morning, - Yes on

up offsetting Is to given the organic sales or that's that it's - timing be just would Any it X%, the stronger against Dan, X% or for color up is year, Thanks. the you X% that X% Is outbreak, that, trends maybe the aftermarket just surprised guide year. seeing. mentioned on to tough for XX% I’m On appreciated. comps? not you're there or something the was

Dan Crowley

a the they the they the time You below inductions through the Roughly track march. bet. X,XXX year our of we and all come and started by Yes. month, into We to hitting were got X,XXX that sites fiscal increased month-over-month, out year. MRO steadily

of So, year. through increase XX% a the course the

is of Internationals going service by encouraged you to up, aircraft. return to as opened expand. the we’re know. So, China

in increased TASA is which seeing Our Thailand, site, is traffic.

prior drive. So, and to going went our the extend as came really to extended people boneyard we aftermarket's continue spares. just want service down Spares Where is to years intervals. aftermarket in in to

back even than pick spares to starting stronger margins up is sparing overhaul. Now, and carries

those France. So, join with we're to optimistic we’re we're about continuing at that and at plants that, Air support our aftermarket and partners ventures hiring

about we're So, excited future the aftermarket. in

Peter Arment

free some Appreciate of long then mid positive, cash that improvement? that. Thanks. to about I follow-up things some as turning just which looking your high the to kind a drivers? kind great, you X.X% the there? X.X% is talked getting just, And mean, cashflow the think bigger working that, guide. of How to of of it just single Jim, of the on on coming do finally sales about of We've it's for capital digits. down, is that What you're about interest kind are

Jim McCabe

a is Yes, ‘XX of so And you single ‘XX. free cadence ‘XX digits as will and the we'll we’re $XX in move low digits $XX guide cashflow goal of and going be just a digits to then the see that's cashflow, ‘XX, Obviously, then sales. in in in and our single single kind on mid-single million high free into to of to up higher digits in the million be, the the of percentage the ramp, we're beginning.

Peter Arment

color. the Appreciate guys. Thanks,

Operator

question your with will next Myles go Walton Please Wolfe. come question. our with And from ahead

Myles Walton

parts Thanks. EPS an I couple was moving Good morning. the a hoping from us maybe of could give perspective. you

Is think about you've fiscal you've somewhere together, right them, you that that I ballpark? think a put warrant got adjustment. Is EPS the all for us interest but I the obviously, to closer as has most issue of it given ‘XX $X.XX? when the and well

Jim McCabe

exercises. we're exercised. count you because that forma moving of building to to share pro you there's by Share the all mentioned. have reason guide give didn't assume think them blocks. skewed is to we as been And accounting, has then count, The the I warrant trying is So, which of EPS

some increased So, and worth shares we which million $X exercises, of period, reduced debt. the warrant during of had

your components, I So, give you of can of to we each assumptions shares the make all the call, can going probably through in the follow-up outstanding. own you number you about and we're think talk and them

that's guiding as exercised. EPS We're to going the the as So, intent to get warrant's there. soon back

Myles Walton

realized And this outlook be that is Okay. point? of at what the for to sort

Jim McCabe

the $X warrants million and was debt then there million exercised, cash raised. quarter, and of Well, $X that worth for about in of shares, retired, million tendered $X was was

the So, when They expire they in dictate market will December. transact.

Myles Walton

Okay.

Just I One thought interesting aftermarket sort margin. Are color one on of Slide between those the seeing in that was both of and Is side is and a more sort the you're implied other? improving guidance margin, can. X, XX%, I slides tandem? implied you this of XX% next improvement year there, or the guess, if implied what into OEM of the year, margin the in aftermarket, there the and OEM, more

Jim McCabe

Yes, improving to they're our both improving. And more went Aftermarket XX% XX%. from is mix OEM. than

seeing through profitability, we're flow operating but margins that leverage don't more within increase fixed we higher the XX%, mix drove and alone just costs. because even from the So, sales there's increase a as

Myles Walton

there $XXX for enough ‘XX you've Okay. maintain Is putting this EBITDA to point? up target had then Dan, out And trajectory the for ‘XX at fiscal ’XX. million you're that the for

Dan Crowley

So, measurement. a we think quarter-to-quarter so. It's

tracking a multi-year rate closely. it's Although so the goal, we're OEM

happen. of higher the week, going last lot that lever, to really that rate quarter one of are it us direct along I confidence in to mentioned volume basis. give that you're with bad mentioned, Airbus only exception is low number hand-to-hand in We to they're shortages advertising on-time shortages, had an our There's number. working has no as percentage XXs. on the conversations want to aftermarket to that cop the And step-ups hitting but delivery Boeing the get with in As with my a there's suppliers doubt, those or the and on mid-XXs script, so I improved Jim

hit million. ramp repairs, us that's for to rate lever is going those $XXX As step-ups. the in confidence to recovers spirit the ramp on their their up Boeing's biggest And

profitability, to continue update give you that we'll free the that. Jim At on bridges So, and revenue, on mentioned, Day cashflow. more Investor both and the color we'll

Myles Walton

Thanks Okay. much. so

Operator

question your our Epstein America. question. with with will from of Ron Bank go next And ahead come Please

Ron Epstein

morning, Dan. Good

disruptive so So, gone guess cleanup right? it five and was question, business Check. worst we how for so years where and free now, you When I now, a positive, through we've your kind downturn to going. out on big what's Dan, be? years picture you That's think company and kind is forth. like, I could look got the The so of of on where from vision when But cashflow mean, the here? from XX great. Triumph of from the to

Dan Crowley

and we you're gear you the NX. happening And window, that'll our platforms know that mentioned you've will to towards a or on castings be got funding next-gen journey. a that a Ron. And I meet heat and thanks, that now in to XX because five at doing engines. got our is and Yes, what ask to lines looked fielded our transfer us the whether boxes fuel do the propellers, customers whole LM regional fleet going deserve power actuation. whether IP is as us us great this for are for bypass I've the the Triumph we're content, an I jet see is to key R&D electric electrical the years, requires the question leader market additive the because making gear been variable it's helping need. fleet, talked we've on boxes, pumps. you're manufacturing, electric about with going replace it's product pumps roles And expansion. those that jet on those We're XX investments. that We've G, gearbox And to right five-to-XX-year current and more adapt fuel exchangers, as in see the evolves products to to to reason Airbus the

technology we the products can then So, new and pipeline tell is transitioning be of into going and to that starts production.

the we other So, in years, see we we're us FAA, and company ATA engine do continue And our it. products. in in think overhaul what today, branch we'll working going because especially will Asia Middle thrust more on look into guess but global services, already the will don't we're partnerships to five a us investments And aftermarket accessories, I as to be make the in reverser like and Triumph the East. to you'll have chapters, supplier future's expand making

So, XXXX bigger structures. Moogs, mix company Triumph think a going path that's the the a as we in markets. portfolio than We're as Parkers, terms of have footprint of Triumph much that stronger of in with global comparable to down business even had Eatons, a to of went a the when the

Ron Epstein

then mix I goal be And Like your defense, mean, that you of will how the ultimately? commercial? between much think do and for defense what's right?

Dan Crowley

So, when the point more pursue now mix diversity and reduction. enough in XX%. commercial XX/XX we contribution started, to debt to were And where selective of on based be we business there's our its can balance we and that we getting generation and cashflow we're we're on defense what

we plenty of in it's mentioned, side. a have defense the be are because on So, strong the both and as budgets position now, good to

now debt on less individual the core, free our programs management out level Everybody XX% may is the coming to up. XX% grow you're focused reduction earnings seeing and contribution starting is that are cashflow at defense, important already than generation, to to the but topline we ultimately, is So, number financial the team on goals. and and in of

the is Now, cash. focus on

Ron Epstein

you do in out parts. the spares because market, just no you there. been There's mean, can Is the I there out I'm of this, nothing kind guys In grow of part. term if bigger there, PMA looking business? then and there's airlines just may, push follow-on. quick anything one usable are I seeing virtually to USM for medium parts spare there's And certain it. a Got current the guys

Dan Crowley

production depots In the in our are plants. that got we've businesses, OEM embedded

definitely And the so, all hydraulic recapturing holdback deck, our for the team it's Whether military, Triumph an time fuses aftermarket FAA goes tail is priority. off it's every holdback a the bar. or consumable bars

I OEM point factories sale materials. the your that focused got are have. extending the we've that aftermarket used products really serviceable for on So, understand on we

extent. great in don't aftermarket, play These Asia, East, potentially us, and a markets For the so regional it's Latin that we middle are expansion really America. to

see expansion. regional So, volume growth we'll through

Ron Epstein

you Got much. you. Thank very

Operator

Michael And ahead next Truist. go our Please will question with question. your Ciarmoli come with from

Michael Ciarmoli

and guys. just kind of the morning, to on I Thanks topic, years of stay cashflow that been you've here. congrats Hey since topic, on here. for to think six on Ron's question been six original Dan, free the it's getting that years Maybe, taking or good questions kind

got I long five you have mean, XX-year now? do specifically, that You've the has think the interiors is do core portfolio renamed interior And structure. left? I any to guess businesses mean, for a life there shaping I look you in Triumph? more

Dan Crowley

thanks, Michael. Yes,

business is of sales, metallic structures XX% of entirely. First, remember than portfolio our now is and less the out structures the that

largely So, posted what's interiors. is left ‘XX And breakeven. being business interiors remember, numbers and fiscal QX these our we with for

a got That past. lot in of a business here. we've the upside So, was business XX%

over in the planning to two the our a expect very cost factories We've It's very it's double volume plant. horizon, We lean. and really all consolidated Mexico. work into good competitive, down

to business margin tailwind future. do be going a to the interiors we're we cashflow we big So, on in think well. expansion and a that And it's bullish it's and

We that are ducting, are for it's in or cabin us. all those whether market space, floors, strengths insulation leader

And So, we deliver about exits, we got the it. years the we're transformation. minor But product now to restructuring some have line the business today. been excited overall, to may on although we've do coming we've and we led need portfolio the has six to Triumph,

Michael Ciarmoli

maybe more drag? then mechanics do Is color at cap then behind interest And maybe can come close to guys pairing should the you on structure to down Helpful. to structure about, that the you on equity the and that warrants it. and Is kind as that, free managing sort look any a digits, that cashflow, there? just think just single be optimization And offerings the grinding cap Got interest it there working high of more give mid-single digits manage going ultimately Jim, and here, to you capital? burden? sort we of of any that even contemplate of us

Jim McCabe

thanks. So,

And in improvements structure conservative cashflow. for growing structure note This of it's aftermarket going pretty our moving base, on the to as we're increases, important forward. I'm really aftermarket. from operating think we're is to install I OEM capital capital relying a volume assumption. that the from bigger cashflow demand have But in coming percentage we’re not

cashflow will on. for we So if work not us that, we that's only our counting But can find which optimize guidance. ways upside to for that we're on

as used capital working our million to supply last generate really digits and of capital, of plan. going the I our of $XX efficiencies think terms year single of working stabilization we're we is And capital, In working well. roughly own and chain because in in $XX internal of that's

contributor capital, growth reducing because cash generating capital. working the So, remaining little bit be by contribute, are a it'll course, though going of but of still we we're with to and modest a even working inventory that's supporting

So, capital-driven. it's operationally-driven, not

Michael Ciarmoli

I'll jump Thanks, it. Got in Perfect. the guys. back queue.

Operator

question Please next your TD Ayers our will Cowen. go come with from question. with ahead And Jack

Jack Ayers

Cai is Hi, for today. thanks. quarter. on on the Congrats morning. This Good Jack

yes, a the start calibrated transaction I'm I just QX, with sure I that sequentially. margins not commercial just obviously so And here. wanted that out strong to wanted called quarter. I sure IP to from was know make previous really, we’re on you So, improvement, side. just on really growing if OEM

Just helpful. there, associated any would really color earnings of just be the Thanks. that and

Jim McCabe

Yes, couple very was material Fourth a was of quarter QX That was ago. thanks, that one-timers. transaction It no that quarters happened. Jack. clean, in

Jack Ayers

Thanks. know want and that and T-X just And couple look just just sort kind new That programs in of here out about on I broad lastly, next sense. hear military you good a ask of your I have of wanted military. the years, there. years. Boeing as watching know issue, on you're out called got content Okay, I to perspective then here we over few new color delays it. I And guys pretty makes programs the for then and to any

Dan Crowley

bet. You

on the in rejection, focused that that been content F-XX. now, we've Martin mature like are like by develop So, heat actuation. areas cooling, to the we're Lockheed And production in approached programs would aircraft upgrade

that's the had programs T-XA. but small used we structures, we do a bigger to Then when We It we're the have on our be start. like content to on emerging first place So, MQ-XX. exited that.

big So, XX are GE’s funded, benefits NX, LM gen content But driver. I well on the military a has got the T-XA across now competitions different is of and two advantages which are mentioned fighters lot pretty OEMs. engine engine, the the sixth new getting not And that understood. of a we've

a So, strong very we're for Triumph. excited. I'd is area say, rotorcraft

rep awards, their we go volume. up So, gets as CH-XXK in L

set We that content and lift the platform, on have future - significant ships then they're gen on future platforms. vertical Army's working

both doing existing customers And of fleet. our to their teams We’re when those (FARR) and time also tech it's for are on a refresh FLRAA.

of time. lot for fleet do gear well. the they're though for boxes exchanger Apache. going their a long modernization, work as Apache. the We a think starting So, to do heat We even And that for Army's legacy operate

increase so, refresh And engine components and in our fixes they're that the especially control reliability. to at we them do, business, putting their

So, diverse set late more of it's is military, platforms. One for more it's a or we've broad us, had and Martin, Grumman Lockheed inquiries that that. of area in classified Northrop on had whether we've inbounds programs,

improved chain sharing, manufacturing on been which well. it's provide put whether digital we've all with suppliers have on to as the them or collaborating they'd So, working with Lockheed capability, data, to we're engineering their and supply data like place thread in

they're of all feel I good. benefits. the the like The gives cash of early are the pulling a in phases. sorts defense The So, us and lot funds customer us terms ancillary R&D, business in

our going happy us and expanded benefit I’m to going forward. work have to So, it's defense

Jack Ayers

That's great. Thanks, guys.

Operator

question. Walton follow question go Thank a you. will up be Please with ahead from Myles [Operator instructions] Our Wolfe. with next your

Myles Walton

carry Thanks forgot I predated I the quality were Daher realize carrying that have issues facility might I'm I today. year, sale you but in you XXX a in don't you're be had if did to have back Boeing to quick XXX for for know that just tank? I liability me one the ask. in. that the to there any all sold discovered the middle the one liability of last is curious, fuel letting there's anything

Dan Crowley

July support commercial No, this at to programs consent, the material defense not we was time. in this there. year. at both any of issues And to across were related that time, Boeing, manufacturing and we sold business the material Boeing there issues no continue that outstanding, And Recall, we of last and board. had

prior from reach we're We've my proud and performance I You to had not of poor know the divestitures. we've in back sales, I'm of quality. that XX asset about cost quality. done committed comments mentioned very

So, it's and we'll not right received any the update we'll that as appropriate. inquiries But a concern. investors support in future, now, we've

Myles Walton

Okay, perfect. Thanks.

Operator

Poponak question. with with from And Sachs. come go Noah our next Please Goldman question ahead will your

Noah Poponak

about where or X rates. laid about Hey, good morning, the ask everyone. I Slide you've out wanted OEM to talk

some while guess for maybe but others maybe little and of I this closer like and lot space. a like the a of there's bit slide ‘XX to. in more a noise than a been little optimistic ‘XX had along, we're that now all movement, had the You’ve short-term that getting you've the the

in that XX or time. I others? to that just eight-to-XX-month I questions think has quoted guess, maybe Is and MAX How bit said you lead I you to fittings confidence little than it, hear with right you the two you was most one So, curious don't I your there an now putt overall, I the in more long are confident know. think XX? of issue. the level specifically And a of the these. Dan, look a then

now. now? about right from this rates is XX eight you these the Are so, chart of side most months at of And to

Dan Crowley

So my contract the eight by awarded for it. A-XXX After the of maxxed that volume we recall, seeing that varies largest tomorrow. finished output But catch that's there GE of on support closed, we gear confidence LEAP was demand but our for Triumph for received in just on coming put the it signal press And up. engine years a been And bit it's demand has engines. on a a back. watch out we'll allowed we're engines to both GE’s over chain QX boxes. you components. release quarter And yes, a on It's not factory, feeder to family. of and fiscal the the pickups airframe plants as ‘XX, to high is supply a if And because the LEAP middle in slowdown in GE very for of with also

XXX mold coming watching are the but And Triumph time. rates only long not the out, all-digital Boeing's times, new I've is composites was I've on space when been in XXX, indicators, a down I've supplier, engine the also supply leading plant and which when its sub-tier rolled very their that which the they I a broke the up. approaches. initially line this many style. been the there's through chain really aircraft. did then first touring providers automotive remember So, as the plants with And been MAX

amount pandemic to of the and shortages, ramp the putting Yes, ramp real. up out capacity that during up. the people expedite in have are part So, to under-invested starting to in is was capacity is tremendous they Boeing field any line. constraints the

I of rates. There seems shortage no confidence in end market So, demand. the be to have

for read these. the You've orders about

because on on of a So, content backlog is that the before. tailwind If growing. we lot from were high. get huge advertised XX that a XXXX, And platform demand XXX. the XXXX, very that's XXX is back that has to we can at to five, step-ups four And the on for have we Boeing XX, rate as for Triumph rate the by

next So, years. believe happen achievable we I happen sort enough, soon in agree, rates two but will are of the and these can't it

that lay forecast, possible. billion the key in which is back getting to kind expect, our cash conversion So, as all multi-year make that revenue like - generating of $X rates out hitting and to we these you

Noah Poponak

estimate rate Can moment? you but the out sending this it's explained company different that of enterprise-wide facility, Okay. estimate the are you - by you you I can know at maxxed

Dan Crowley

I So, from it the support I an don't action? want the We hip, it XX we because to offline. why as as know it plants And six address do by we plant. take of mentioned, that don't but can MAX. the

We have content, content, actuation interiors controls.

through CFM. GE LEAP engine and boxes So, then gear

support right that was gear GE to broad volume you, and made it maintain it and pricing. tell key plants, helped significant CapEx And I'd But We've coming to our the up. of get is can So, the follow-on rather winning I it's support it's in do contract, ramp. array manufacturing LEAP a and business investment this it. us

sure. a coming for attraction it's So,

Noah Poponak

Okay.

that that then net and you millions also bridge of OEM X. what that to small sliver your say of the number in Slide Excel, pretty volume to about blue just on point could relative so, kind that Slide for dollars? there that? in all XX, And is is And Sheila's and to follow on asking Why sliver looks

Jim McCabe

Thanks.

So, the but it’s quantified And is OEM have not it front in remember, as Jim. of me, than aftermarket are in profitable that smaller I don't sales as sliver volume. sales. fact, aftermarket

cashflow, terms has of in different profit important. more free The actually generating the programs. of aftermarket are lot and So, OEM volume a

would there see to And backlog. commercial. the way best might top to a in you'll which is be see think and programs I XX, be look our what mix the at of Slide military and

the any Diversity two-year here of can in changes the mitigated see program is more total the our you'll lot or XX, of firm mix XX% which the It's or why XX% our a and like backlog. rate of Now, another direction sales by There's ship. backlogged. aren't all XX% actually rates of our is of because be program. exact of other book sales one

So, and right aftermarket it it is a OEM balanced growth is the it, leading lines. behind with

Dan Crowley

they've than here what be trying or OEM of you advertised. And no, we're appreciate, not the recovery to can ahead conservative rates get assume faster and

guidance consistent So, with that is mindset. our

Noah Poponak

All much. so Okay. right. Thanks

Operator

be question Please from your And Michael last with ahead go Truist. will our question. a follow-up Ciarmoli with

Michael Ciarmoli

XX, but there, A-XXX and of just I where taking specifically Hey, ‘XX by targeting guys, Airbus they’re of end follow-up. supply XX in said, dealing that but was going know guess issues, Noah with the XX. has for chain on I the to, I kind going regards they’re in still the some thanks to hone what to rate was on

rate think about that time? So, with how eight-to-XX-month lead do XX we that

Dan Crowley

March. going the refer So, want they but speak Airbus up them, I'm I month-over-month their if deliveries, in to to very you for because ending saw came don't quickly you to month

timely from future And so, issues, but project the in working you revenues, yes, look rates build they very have supply to to future the there. at chain order are data also

Michael Ciarmoli

guys. enough. Thanks, fair Okay,

Operator

conference We question-and-answer like in thank participating presentation. our concludes you concludes and today’s call. for also would today’s and to this attending And session,

now may You disconnect.

Triumph (TGI) 17 May 232023 Q4 Earnings call transcript