TGI - Earnings call 3 2024 | Triumph Group, Inc.

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Operator

Welcome to Triumph Group's Third Quarter Fiscal Year 2021 Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to introduce Tom Quigley, Triumph's Vice President of Investor Relations. Please go ahead.

Thomas Quigley

Thank you. to quarter welcome call. XXXX and morning, our fiscal third 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 adjusted our our refer We'll on quarter, discuss we posted results. financial review this the for presentation

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

Daniel Crowley

welcome and quarter And an discuss QX action my expectations the by results the to third Tom, upswing. on and the provide. performance benefits will QX record Thanks, primary the Jim our and impacting results open it product and strategic I year took with significant will covering we sale our call. remarks factors for fiscal and the I'll support Triumph's our end to

remains I'm to outlook. the and of our quarter. expanding with track is up about deliver announced cash to Overall, multiyear wrap the future business, I'll product excited opportunity support discuss This our this and instill growth first flow. which profitability which our ability sale in on Triumph's drivers, of close levels to recently our confidence

financial a that For game-changing and transaction, both one Triumph, benefits. this strategic provide will is

and accelerating priorities. path During XXXX creation priorities line with communicated stakeholder Investor Day, value our in to our Triumph's September we

over a by top reducing on of a XX% notice transformative our closure. net has sheet this divestiture early carry more provided by certain On progress Tuesday, as this delevering provide priority. transaction debt reducing Jim our significantly will we our on as accelerate later. interest following repayment of Delevering our our bonds. This color and the balance been March will conditional materially

flow Slide and X, both systems design free financial positions to of enter and and combined consistent this a with it's As value represents and strategic own When cash our higher transaction win growth to our earnings focus remaining and components cash summarized and for divestiture to improvement Triumph with our lower flow with creation. the on of truly and aftermarket shareholder cycle tail. bondholders on our recursive free own operations, our plan to debt expanding shareholders from differentiated a our entirely accelerate

products sites business controls. Systems and gears, engine actuation shown As X sites servicing Triumph will control and providing X cabin post and X acoustic sites X, focused Slide components. on ducting systems, insulation transmissions, sites primary X and compete and hydraulic actuation controls solutions with services interiors integrated electric areas: with geared on XX fuel in closing, and with mechanical thermal markets, loose gearboxes and producing the composite thermal and power with

sales competitive and and substantially which IT-based transformation customers platforms. are lean will benefit source. Post of of our sole These diversity all businesses, closing, and/or Triumph from be

that to during operational the positioned well company ensures we our improvements builds targets. remaining optimized are and on rightsize with our taking long-term transformation to an implemented the steps immediate structure financial We operational achieve cost and are

Triumph's the portfolio. the steady to of expect we IP-based progress strength medium on or towards and product cash XX% To continue EBITDA free of be margins sales XX% flow over conversion our clear, of better term

on were I clearly challenges. there December, As in reflect that ended quarter the third

achieve consecutive flow. positive quarters pleased ability I'm our and generate X to free with organic cash growth to However, of sales

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

valuable generated year-over-year continue and for will for discontinued repairs our rates. our sales. MRO MRO driver after Triumph our We increasing growth by market Even to Triumph XX% backlog sale. of XX% financial aftermarket array sales by be OEM company results, production markets. driven of a sales robust QX broad of rates excluding in and and a with third-party participation accounting Triumph grew spares platforms, commercial the our as its XX% expands above total sales growth organic customers increased year-over-year a end

mitigate presented was dilution and Our at to a and cash And we the rightsizing year-to-date Day. product we across the our in achieve mentioned short-term metrics the to reduction very $XX actions strong Triumph as the efforts, margin from Investor part cost X.XX. book-to-bill initiated sales long-term any for company of million support earnings

sales free in While Earnings a came and supply expectations a margin business. below due result and chain as delayed QX cash strong, of finite of interiors shortages weakness in were flow our to set shipments continued

and facts confidence our in forecast. provide our on year full I'll cover head supporting both topics

which future. in delayed these the to the from on machine shortages these sources the early XX% with balance. and alternate suppliers still delivery and been margin although castings The to late were bearings. staff specific results for fourth firms seeing metric, our improved deliveries, deliveries, supplier experienced make touch QX. in First, on electronics, higher commitments to up and Prime and expediting their capital components, we are working I've deliveries QX the overall QX, deliveries and held shortages, in to we're our their of full primarily XX% over sequentially on-time quarter at secure CEOs site contributed developing

QX which of sales solid January approximately deliveries million, were our with $XXX forecast. supports monthly

We sales. QX. no and completed meaning waiting be approvals customer Interior QX sales fiscal close by total Triumph's products already of only year. on In relieved all to XX% in collect. to are the quarter, expect and we've increased the needed million in is demand that XX% of ship cases, are new firm, inventory orders to many Customer though over $XX there's

continued headwinds of inflation and mentioned previously material to profitability and rate. the Interiors QX exchange peso the labor in to flow due said, expectations and That the free in cash quarter lag

these results However, about change. are to

X improvements the events you X,XXX-plus to this page of in all of in QX specified posted raised offset price and as affecting Mexico. the year men doing videos we outs to have call the high some in Triumph's source our and women a We I minimum to initiated prices. alternative customers earlier where generate actions. website the business sole in wage material have increases EBITDA where or Interiors teens sources the expect result Increased the the linked adjustments developing in input their to of products encourage lead for suppliers them. productivity mid- following margins Contract companies those to plants view behind see labor from

take And absorption the and Triumph's ready capacity. on we our then are additional not been supporting asked from have work overhead ramps, lastly, to competitors customers' OEM a sign who benefits of loyalty from our

businesses, programs and them and work levels done and double-digit red Solutions 'XX Engine on Controls to business free will our transition production. Geared on Similarly, of of deliver to to Interiors be our As restored margins flow. cash with development are we retire of is actuation margins years fiscal track profitability path and prior after have to EBITDA both in generate XX%. which can above to

on price fiscal to margin will a seasonality, sales year-end, and increases X puts the selected us to into of that looking record QX track IP sales, tailwinds combined 'XX expansion. and deferred QX our ahead translate Turning have Page incremental to inherent year-over-year

guidance for updated Our of sale support. product adjusts the

'XX. We sight to QX in have XX.X% a of XX% fiscal compared deliver line clear over for RemainCo to our across EBITDA margins

and OE who commercial the product QX. shipments deliveries their posted very with As are QX, our in robust collections cash in we busy with aircraft

with we after look cross providing including noted, We deliveries that of next 'XX free $XXX our interest call As guidance from fiscal all fiscal financial support measures, to product takeout improvement assurance daily over year-end the during earnings million were January close cost year. of to reflect conduct contribution our calls the our payments. our flow strong portfolio out delivery and year-over-year expected lower closes results with cash 'XX forward actions, improvement as prior combined transaction to

market third results updated more Then our quarter 'XX for fiscal through Jim? end us and return and drivers. take I'll now our outlook outlook will detail. discuss to Jim in growth

James McCabe

operations everyone. is product over proceeds $XX transform leverage periods of of Product debt reported profile balance lower outstanding close track approximately Support next debt and approximately and as annual our lower a on forward. will This net our by the to The reduce $XXX and million historical. this by credit moving business savings opportunity approximately will Dan, cash our cost even and The Triumph's EBITDA which and morning, fiscal of leverage expense will sale for more all current will business, presented XX% discontinued month. good Xx sheet. reduce interest reduce improve The now in to adjusted by is year-end create million. Triumph's support quarter Thanks, will Net interest

note Slide in the $XX are reduction that a benefited It financial period from have is million we from important transitional in Triumph's debt annual the or operations as targets. to X and debt yet net of we reporting. continuing savings continuing expected flow not QX from interest our to and the for of reduction the business manage On cash is transaction from cost margin proceeds million $XX planned liquidity. the achieve fixed consolidated our

debt. we XX, December of net billion of just $X.X under As had

availability ] [ approximately Our cash $XXX and was million.

market. of million we in During our the notes purchased $XX quarter, unsecured the XXXX

million $X for We we discount business bondholders the notes at delever XXX. to conditional sheet. of gain. redemption proceeds that those net To and our strengthen sale balance end, use of lien lien XXXX resulting a to intend notice in first the with $XXX our notes the a to purchased to We at of the million redeem first product support provided a par, yesterday,

to on redemption We to sale only conditional an first of conduct lien holders. offer at are and our the closing asset par. note sale also bondholders will with occur of the after redeem notice unsecured the unsecured Both all redemptions we a conditioned XXXX redemption notes unsecured of our provided the

our to lien notes $XXX results million first systems growth period, less impact whether should net are the is above proceeds, revenue at than holders' third trading and quarter $XXX forma notes The prior for the and and expected support. decision year the by par, Pro Triumph's debt divestiture business generation par. in their significant offset improvement currently partially and solutions tender cash geared of which in million. reflect in Triumph's softness interiors results over

Slide On the consolidated the for results quarter. was $XXX Revenue are X million.

business, exited of markets, revenue Organic year from commercial income the benefited for EBITDA XX% was quarter end year-over-year operating representing a slightly a quarter declined for million, $XX margin. military was EBITDA basis. Adjusted $XX the representing most Adjusted aftermarket operating quarter the the a our spares increased excluding margin. during XX% on the and volumes and OEM commercial quarter. primarily divestitures increased growth while programs, organic and prior across over continuing demand revenue For repairs X% million,

expect We be fourth Slide market commercial revenue see revenue. quarter our growing you higher our significantly will as shows to in guidance. margins X

revenue. representing For the quarter, total were was were and commercial in the million, million XX% revenue continuing sales $XXX Commercial OEM up business. $XXX XX% of

including increases XX shows Commercial programs. This XXX and for by military our continuing growth revenue, aftermarket volume which was the aftermarket sales is XX% on million in in commercial and slightly. spares down the grew driven and strong in Boeing XXX price business $XX demand Slide key both programs of repairs.

revenue. the For representing XX% total $XX revenue military million, quarter, was of

spares our represented to about Military offset over year on aftermarket compared down on on of V-XX, and sales sales non-aviation, were expected, prior unfavorable year. sales repairs. of quarter is in sales quarter profitable, versus which The the year Military were million last OEM slightly last of in demand is is $X partially the for remaining program. CH-XXK AH-XX the timing revenue lower down down and as and X% growth X% were X% by E-XD

million support is in in of sales free flow flow on of fourth increasing million working cash $XX even cash generated with using flow XX. Our quarter increasing capital generation. QX, of volume We and $XX free walk Slide cash free cash

on Slide 'XX Our fiscal XX. guidance begins

in revenue guidance being anticipated $X.X expect reported rates, in fiscal of $X.XX support XX% 'XX, aircraft since of XX% growth range on discontinued we to Our is updated billion as production operations. now with Based product organic to it is billion. exclude the to

EBITDA EBITDA margin $XXX million adjusted is range million, the fiscal Our to indicating business. in up 'XX $XXX guidance in to XX% consolidated the in continuing of a

quarter operations and our Pro consistent backlog on solidly to prior with savings, for reduction we debt to in increased fourth turns. working continue sales interest be driven expect by capital in seasonality inventory positive year continuing the forma QX, surge, liquidation the cash reduction past-due

May. later We will than and the our earnings year-end include continue no support the our in to given cash call next product uncertainty in closing investors guidance update timing around

the expected of expense prior Interest following of million from taxes. business. to at This interest, and million product 'XX drive $XX the net the of to million to approximately the interest closing annual Xx is margin savings and $XXX expect Organic leverage of cash support month. our $XXX last are reduction of be anticipated X.Xx is sale from end to next cash generation we expansion, reduction expected million, fiscal of cash including the fiscal debt debt year-end $X

our and do expect time updating as guidance next we call. year operating plans are FY on We to this provide our each 'XX earnings

the consider reduction all With as million million end presented, actions discontinued $XX you reduction continuing also and support results annual the divestiture $XX being cost classified of proceeds from the current business, savings and debt market, in the product sales periods by taken. fixed the historical interest product with business now have all including Please for of operations support. excluding

organic summary, on yet of chain focus positive addressing. to IP-based fundamentals which than due and MRO OEM industry-wide and business. lower included we generation, supply strong components, inflation, remain growth continue cash to In spares and and planned third operating results are Triumph's the actively solid both as EBITDA revenue of we margin constraints quarter our impact

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

Daniel Crowley

Jim. Thanks,

in we another I in XX. at XXXX. passenger detail Turning to the X/X measure levels rise of product is our investments to airline expected revenues sales. and roughly demand underpin above on Page growth Triumph's in the and travel share in were excitement or want lifting to XX% XXXX, which that This demand, global Both XXXX RPKs future. more Triumph outlook

in cal projections Airbus are recovery orders is and reflected supplier orders XX narrow-body net the airline Airbus pump. actuation, holding rate year on valves, XXXneo aircraft strong main in commercial per door in transport content LEAP production now financials hydraulic AXXX largely month, The transfer engine finished with XXXX up the X,XXX reflected higher locks includes at Triumph's engine portal. a their record as Airbus aircraft rate landing of family gearbox and

content year pumps, Boeing at AXXX, valves, net gives the at XXX highest aircraft. of includes our cabin orders utility now the content XXX which are rates us orders at since million On higher that rate Airbus XX per is ramping Triumph's second likely. profitable shipset on month, so programs. that control secured confidence highest increasingly value Dreamliner program or including month launch, per Note X actuation program X,XXX $X and a of the installation,

Year-over-year, Together, is revenue as and shipments XX% orders. XX% in as backlog up programs in X XXX XXXX, aggregate Boeing posted aircraft substantial is Airbus top aisle have on aisle twin even we This Triumph 'XX fiscal rose content. good while substantially. another news the twin rise Triumph's commercial for

in Boeing headlines recent maintaining the approximately we the on who build rates are component aligned XXX production with per MAX of XX month Regarding rate, supplier are portal. their

our to expect the do multiyear to impact projections announcements. any FAA recent not We due

In summary, to the efforts supply XX% the Despite supporting aircraft. and well. increase both impacting continue production supply as year-over-year. of the are chain Triumph's with ramp industry sales improvement are up and We commercial expected wide-body narrow-body challenges Boeing's quality fully to chain-wide OEM

get Army's side, to a as military next-gen Future rotation of such transition development legacy and investments as platforms and V-XX the and the demand dominance seeing as Lift platform the UHXX such started. as On air OEM production such CH-XXK for decline, the aircraft, next-gen programs while and T-XA we're Vertical

[ Sprint design, On [ Slide fueldraulic additional included XX, key all shocks DARPA a military wins for quarter on ] GE mainland solutions IP. and program, actuators, nose ] gearbox CXXXXEVtall, the Triumph gear based and engine betas

our starts work legacy our replacing this Triumph's streams. and turn to where military generate sales, product will over mix to is of new new business we Now innovation value programs with continue long-term expect on XX% of and aftermarket

funding, for whereby on Slide will and point, often actuators redundant, strong horizon with find are advantage. XX. core products competitive critical the a of been our these customer growth engine of on for engine to proof A approach that modular and of APUs a actuation on over digital military cyber Honeywell's scalable, has controls, next-gen developed planning Triumph our and commercial Triumph embarked gearboxes, GE's case affordable. platforms, core engines and controls selected thermal Turning modular strength source cooling, products both application solutions be the has and in and

expect of we Thermal state-of-the-art to Triumph's to core West Center State Connecticut. in non-wing, top at of come. generate I products the On qualified with these Development bottom Solutions significant the Once growth Slide line opening years XX, to recent want highlight in partnership and Hartford new the also

that increase, offboard. thermal aircraft aircraft need get designers heat ways loads and As electrical to

base capabilities develop components And this and our integrated to will new customer provide thermal lab system to next-gen solutions. thermal growing helping

effort. excited system X is firms Phase are compete down Raytheon and solution our Lightning capability about known X vapor by Hartford management Center. the F-XX the We're will program as incumbent against We in X advanced cycle that selected F-XX XX-kilowatt Technologies our and integration to power an the in competing particularly offering new Development Triumph II thermal for lead validated joint be the for where to development of PTMS, Thermal the cooling West Honeywell office be for

Bell thermal We are other programs ] Northrop Atomics. [ engaged Grumman, on and Sikorsky General with solution

commercial improving next-gen QX recipe Triumph's a you've our initiated with summary, actions strong on in balance the in in cost combine you takeout sales demand, military steadily got strong OEM and position in So and if ahead. sheet high-margin years for platforms, QX we improving and follow-through aftermarket

and our demonstrates my in a for our our QX. and chain expense, are benefits 'XX the for strong happy fuels Triumph's the business. about and our have. OEM and lower creation backlog to beyond company and aftermarket We team any accelerate interest to actions excited are value as questions delays future right look our conditions updating quarter, combined in and for of our forward will to to IP-based commitment in set growing the deleveraging create investors up May very supply our fiscal third are success Despite and you take I

Operator

from will Seifman first [Operator JPMorgan. Instructions] of Our Seth question come

Seth Seifman

So aftermarket. first question had the on I

the kind of that's and interesting spare in I business. repair it was it about including parts. release support So both talks overhaul excluding and assume And the sales, aftermarket product

significantly and split of Triumph. in versus would different parts describe So repair within between terms and how commercial is overhaul spare aftermarket, remaining aftermarket the the and it you the between military? And

James McCabe

Seth, it's Jim.

You're the the analysis. product excludes correct market presentation the that support for end all --

MRO XX-XX $XX In roughly XX% that around was of margin spares aftermarket versus OEM it's business. So it's quarter, But based too. the business in on higher IP, our than the about it's obviously, all And business. million.

we thing that aftermarket, are we're repairs. one make the spares understand that's with we So our property, people in and is in aftermarket the still but intellectual

Seth Seifman

it the as IP-based think being So piece about repairs well. of as

James McCabe

Correct.

Seth Seifman

Okay.

between Okay. Great. The just military And same level is aftermarket commercial question then in a follow-up profitability, very and of rate significant difference there? vein. aftermarket, margin there a that

James McCabe

think Over our the because foreign where we in are U.S. the has costs yes, premium invested time, military no, of that command for they specific the on That's programs, on do government they foreign but IP. based sales. because these profitability haven't a premium are see that comparable We on platform. I levels countries a bigger development

premium for So products. they a pay those

or them, get that benefits be but And of obviously, where FMS one cyclical. us We've quarters had wasn't the that's really when contributed. we more greatly. QX This lumpy spares wasn't tends that -- to

Seth Seifman

Okay. Excellent.

Operator

Jefferies. The comes Sheila Kahyaoglu of from question next

Sheila Kahyaoglu

systems do margins by you're long-term interest dilution. longer target, a made but maybe -- But ask on I support, the that what systems margin think your comment underlying to you [indiscernible] great free keeping lower support job is term? offset think and about about given interest the flow just wanted we I cash that.

maybe looks systems forward? you can if us So on like what profitability rightsize going

James McCabe

Yes.

you [ question. before. business were the for you around we the that margin see pull discops, product out is ] of instead thanks Sheila, forecasting our can this that the year So when Historically, XX% XX% support for

when terms higher margin. average the product a little of down current product our out you So pull support. consolidated in we're in the support business slightly than year being referring was to That's the bit margins what

business same growing. very has still targets is the the still and the has the But rest same growth of characteristics, margin strong and still

system the So support have we'll just margin in and aftermarket. is now IP-based, higher more

Daniel Crowley

Yes.

the take to to can before. dip, is you plus and interiors imagine, to As EBITDA my of they've and levels been Sheila, me out a that's short-term get you but when XX% portfolio, solutions you'll geared at team margins mandate generating management of a that's see profitability business the

mentioned, In to he going profitable their programs winning fact, through these of one used but development get interiors went coming have period and and through turned be said, back, our are and of my that working directors well. those to business, and as most we we're Board margins, gears a reduced the now around

XX% That used a to be business.

actuation, interiors engine So controls, when of all through all on going X gears and you're on see follow cylinders, our are businesses to hitting margins.

Sheila Kahyaoglu

free guidance And the for then closing. it of flow Great. up cash timing follow maybe depending Okay. the your divestiture to on you the on bracketed year,

$XX of flow kind was that or it conversion cash of million free to is XXX% about annually? So fair flow assume support free cash

James McCabe

a high within working other we tends movements have little CapEx period. and the That capital because

So profitability That to do And slide note operations. for purposes, but you guidance we not. support, it don't is product on this sales and includes cash discontinued the footnote exclude there. flow did that important

timing business, the product the included the in support cash it know exact the that So whole of be the don't or we timing. because less we flow transaction might forecast. just depending But closing, including on for more

Daniel Crowley

more business big our have in fact, carries they other and It is, conversion because inventory and support turns that balance the out product component rotable cash a higher. OEM

Sheila Kahyaoglu

closer to it, you cash the is million that that sorry, million think about to So $XX then? have $XX just for delta guidance way in your annualize flow, it's free right

Daniel Crowley

approach. a reasonable That's

Operator

comes Baird. of Arment Peter Next question from

Peter Arment

the sounds out quarter, and confidence the kind higher like it fourth called and seems margins in of that turning of you of your interiors Dan, kind sustainable.

more could a little color you contract give maybe Just around just the adjustments. price

development But some of productivity. you just back red could labor obviously, you Maybe parts the peel And absorption as also I here. confidence said some moving programs. rates around You increase. increased think if just mentioned overhead

Daniel Crowley

programs. Boeing, for a XXX, those all XXX, development Yes. there no all rate. And do interiors, are In AXXX. on programs, mature ramping production in and not are we lot Airbus They're programs just but also

So has which wage I Mexico forces, The the volumes up interiors matter talked main on raised it's absorption has We're a plant, minimum of dealing again. with in external the issues benefits. getting about the or the last how mandate hopefully, the some get -- and the blast us margins the last rate you is had of raise suppliers costs. we've the then same, peso input But do which to exchange remains up.

So on initiatives. the we're down doubling productivity

I of sense much to those X how have do encourage we Mexico you in check get those you just plants the largest out videos because of in plans. a automation already

to materials And like material the that have up significantly blankets make price. up of some use we gone the resins in installation these input

there's cabin Within composite components. the up. insulation, composite So It's X that. ducting ducting components. working on There's and we're mostly really there's been held there's interiors, that's us

other been and have encouraging So have these QX. the customers us of to don't that. commodities to What's discussions not not work They staffing, and you for on said, our our -- as performing early hey, that take on they're that ready to ramp. in is customers we're pricing come with as want suppliers we and we've are

So volume of we're combined productivity see the offset these external to where the drivers. initiatives that's going contributions and

Peter Arment

color. that appreciate I

follow-up a as question. Just

Day. that term, Investor which out you're your laid still that called EBITDA still targeting I in fiscal of is you out approaching 'XX, in kind kind of Is you of that assume margin the your the confident medium company XX%. total still fair? Just over And

James McCabe

planning right So now. we're doing our

So the but still not exact reiterating the we're that's target. timing,

it's So XXX XXX And basis very growing the of were much achievable. year. move timing points to slightly on a can but a we pace

as very planning enable that, the XX% event that each we forward able The volumes soon. to with are And and reduction were different so pace process. overhead reduction. is that a And in efficiencies We're our we continue of to hope looking finish going little segments. the to

Daniel Crowley

Yes.

asked to across it we've the on answer growth sounds of the Peter, that's and sales? gives market. been it we we're when hey, confidence commercial us your are it now. sales the And One the than accounts. translate book-to-bill that is -- seeing year-over-year by is, And running is analysts, great, into MRO going factors, that but see hotter We're

in a When we're or getting was were you higher-margin bearings now that So which in to critical don't high-value really were on have castings shipments disappointment. it's QX, focused of QX. the had up ship we doing can the deliveries. held It that delay And margins impactful. up, them components it's in are a matter some certain that and

those So QX, got we've to it. already we delivered confident been in. in those can we're and Many do get of have

at businesses. the say, path lift in revenue of to on lots going would But XX%, I performing provide a higher for the to market growth is rate the all

Operator

The Myles Walton next Research. of question comes from Wolfe

Myles Walton

much was you're of you reduction company the of of underlying maybe related it already because to hoping, directly is the and Dan, how dig is in was how -- overhead I product support in could million into the cost size it planned. that that removal doing? or XX% And $XX corporate costs much of direct fixed

bit little If deeper. you can just dig a

Daniel Crowley

Certainly.

improved there's It's development and it not was like in So by and [ enough IT pays big take development, $XXX really things number, we spend about really that, automatic how at and our you when research product almost SG&A drive X of gets I systems, of engineering our in for ] smaller million we made And X out operating like the on that you percent as companies, that now platforms portfolio the Patriot the was that as updating we we've controls, overhead. quite and long-term cited. a the that investments $XXX that's strength Raytheon, million, growth. and done

common fashion. or in of the But in back company infrastructure company in doing can of more start we we've run to and a scale been the enough and investments function the those investment agile common processes, leaner IT some now

past. labor. They confident It's in we've we also is been reductions work. can So -- These us margin the our build There's made not on we're maintain do we'll take nonlabor just reductions out that this in costs have help to it. progression. and going

following story a our been time. You've long

plus down So EVPs the you over XX and entirely consolidated EVP presidents. those We level segments, we eliminated presidents when X segment and had X. remember XX to

to further reductions the We're down with of sale Now there. looking TPS X. at

last those matured we've enablers the enablers. The So are as team.

lot We us model team a and stronger at execution, have our a focused a at more really but having centralized looking headquarters. orientation pricing, they strong that's comfortable a take have now value back costs more contracts, decentralized allows profit processes to of that much backlog just leadership going claiming. a And on bit little we're out not of to

that's context for the -- overall those the So million. $XX

Myles Walton

clarification, And XX%. then clarifications, just support I from of you guidance implied think an end, you X just an margins I on percentage But a aftermarket if that product is removed have OE, where about And which dashboard half the little and margins about increased in decrease on implies increased commercial Good. of for could. One military, definition, other percentage have at the were counterintuitive. then is first a basis. EBITDA the by it Okay. the the XX%

James McCabe

Yes. Thanks, Myles.

some gets to to public the we're afternoon. data this filed think with follow up going of with that have with I on

discontinued Q disclosure the operations going You're to see of working in the down.

seasonality of some get in there remember, think product in answers I So is there. support. But your you'll

in is of one seeing fourth quarter you're may the and stronger be that the what quarters, numbers. the So

Myles Walton

then percentage the declines counterintuitive. percentage dashboard sorry, in that military a little implying aftermarket in OE is growth And with the and

James McCabe

positive outlook it's with think to slide. referring growth Slide I XX, you're So the

Myles Walton

to and a [indiscernible] charts percentage two military left bottom to The increase correct. Yes, revenue

Daniel Crowley

started high a that If revenue, military up gone XX% at the we had you'd started XXs. built years restructuring it few on see it then transformation. And the back into when I we

resurging. aircraft the was During And stood now when shot military commercials the then down and up. pandemic fleet

But around. transitioning and in coming this and product money the mentioned moves platforms growth is what those into this support of those So now are to development the that that production reflects to gen. development next spending we're I number the

opportunities And do they tick significant from an OEM as be drive plants portfolio, -- the going around think average. one and will that the see embedded where the But is I XX-XX to has on and TPS a message we're split aftermarket, almost that. on It aftermarket the the exits even want every of to we do that's depot repairs will be clear OEM I year. our continue to So year commercial of move overhaul. And have of then up. really sort we that to

a grow as of our that sales. you'll continue see So to percent

Operator

comes question of Michael Securities. Truist from next The Ciarmoli

Michael Ciarmoli

drive I to XX%. the sales back targets the cash could tied about longer those? in free we Sheila's moving like X% to some I question, of savings at just upside. it Maybe think of How period time should potentially had mean in seems to and the think flow interest conversion you near-term XX kind

any just on targets. cash more color So the

James McCabe

targets The still the same. are

move a those. could it still the in, potential bit those and point, has a be that the remain bring can at just out September. XX% think we differences maybe same, that there to and little going plus deliver are to continuing modest but we're put our and that plus steady-state in margins. XX% was I cash we we that Waypoint And there on did have target and the it's revisiting timing flow business conversion on But

I only to little our maybe our cost a going think are deliver to ability enhance earlier. bit and those outs

Michael Ciarmoli

then just release called press in the Got you Okay. And it. out the revenue Got it. headwind.

to up revenue pretty what some between get you're reconcile, that revenue that the good headwind magnitude of I the and was quarter. What can you to of like detail mean mean, pressure? you all Just obviously quarter? sounds this And it next the kind I tailwinds inventory going the support. But moved saw into difference that pick

James McCabe

Yes.

we last the slightly. total. have to in mean to, I seeing January the And magnitude, the be military they're we driven because late I QX. was that was supplier delivered mostly can at Well, themes that are get I is more related looking in shipments exact electronic some QX. we going down was just example, one the the we're to in night for in or what So it electronics. are if don't ship by more that and have think is behind out ship was I What shortages going of

for working there's approval, they're with that just Dan that ] people process. are final go closely through one done. referred [ We supplier. have falter have we to That's parts example. that other to And waiting So

talk of And part It numbers historic unrealistic third weekly, fourth for that $XXX there is on the seasonality. in quarter-over-quarter, on we quarter. our is which the fourth our the for of we be put In work -- record consistent month. million shortfall we see quarter, what could based lot of a being it. the is is in already hit quarter. we a in so we've you quarter get done quarter. the whole chart sales, done is made to a has first to in not So the It about what is make up what a But plans with month will big hit that quarter. year-over-year sure quarter

Daniel Crowley

Michael? maybe I probably would revenue in shortage the million if say pace helps quarter, of the is that $XX that

Michael Ciarmoli

Okay. Got Perfect. it.

Operator

next from Cai question von of Rumohr The TD comes Cowen.

Cai Von Rumohr

Yes.

looks looks the $XXX you're $XXX it use like EBITDA you're we adjusted million for, million of if systems XX% of business. in guidance, your sales, for And in margins here margins like around midpoint in So mentioned looking it the looking January. you

and big been February very slips more March. slips Are where up? supplier catch assuming this a step up because the you has environment than of any basically, an norm rather in So or kind

the any assuming that you of so some is sort slip you even that would there -- number occurred? assumption hit any if of Are

Daniel Crowley

than don't always That's Thanks, Yes. We time full. XXX% you less do on Cai. but goal, it. allow the for in get

and to we part the OpCo know not we the done that go And ship for a every need finish to terms I We to part week, go shipment the customer of one these do is out through a each know have that we've delivery has X a day, whether what and year. what to payment we door, prioritized cash so that calls consent we've every days daily -- or QX. we assurance chair, assurance

It does tying in and of financials. not they have parts assume earnings what XXX% cash terms to the parts to ship and mix of QX we availability, but sales, the bring out know that

circuit name have can't it boards, they chain. in have supply don't not groups, lots the individual this, perfection in different I us. on go to answer products for and call But plan, are commodity a of assume but bearings, we got is, almost don't call, you So that finite X does the I the you ship and that what if X a pacing suppliers, you lot down won't product. It's interesting really we're example, of them because

food And whole so we've gotten commitments supply and priority. aerospace These that are chain. the vendors

And get share. And giving the January, squeaky can QX, hit that's on we what's we products getting XXX% big time so have still that in started you be commitments. confidence wheel us sometimes get your And those we're to to so in without the to these in step-ups prorated full. even

Cai Von Rumohr

settlement entered where So with Terrific. capital suit? the suit going the We And hair for we is a are a on with resolved last June of the in working buyer some it's been the one, her into second time. year dispute. agreement that

And resolve ability so That we with at related payable do the also an claims [indiscernible] resolved some to have time. issues accounts to the

the filed And at that tank but related Triumph viewed is issue or were of additional sale this We fuel is to our to point indemnification the Boeing, should issue an company, to not seeking the as customer. issues. surprised, in I was known say, litigation an on not December, they against XXX

in have similar claims it. our XXXX. delivering intend in our to quality past. against We responsibility for amount, it's the but work claims of July commitment And products company The seriously through vigorously of that. the is for customers. we fact We take a So bought our large for they defend operation types to an

was of site really part these the as only transformation, the kind and this of portfolio had been And time our issues. has where back sold reach we've

caps been cap limit There's and of our the then because X settlement general about related to mentioned June another of place that have at our There's X already $XX million. we and decremented So liability. caps. a warranties. in cap I about reps which has

there So it. a we a Triumph where I'll this you deliver their there's It's issue continuing to already resolved lay Boeing the out difficult really on has the from side, issue. to contained out. products. point XX-Q nothing perspective. new They've all they're

Operator

The question of comes Strauss David Barclays. from next

David Strauss

it unchanged divestiture, Or actually EBITDA your forecast Did is you if for the you of cut adjusting actually did quite sure. adjust absolute for the -- for the you year. kind wasn't I EBITDA divestiture?

James McCabe

So broke up you a second.

adjust we for did asking, you're our EBITDA think I the?

David Strauss

yes. Exactly,

Sorry. number, divestiture. you adjust The if for absolute the

James McCabe

Yes. removed We support. product just

David Strauss

Okay.

it's at So for that. unchanged

James McCabe

Yes, it be unchanged. materially should

David Strauss

is it is The Jim, seems flow. accretive. Okay. it flow go-forward people have And divestiture mean on Is fair asked to around and correct? as that is couple savings. think relates this cash divestiture a free accretive this -- of free cash I interest I it to like

James McCabe

correct. That's

it's $XX the interest business. harvest flow to to allocated those generation continuing the of definitely to But course the is So of are related is to that the it moving cash the The of accretive part moving forward. savings forward cash you compare And all part when cash normal divested million is positive. it just to accretive business, efficiencies.

David Strauss

that stripping Okay. your higher? And and then higher flow targets then given free why wouldn't the cash free out going forward margin revenue is cash you're flow be

James McCabe

Well, higher XX-plus for has in there. provided

saying And be through the it's I better improved improved planning not and As credit. that savings get with our that, flows alluded debt, we rates going but was the we when thing now, interest team, that with I'm we the process, to go it comments, through. to and only refinance logical the better same our remaining terms in go credit for my profile to to should

cash So flow well. that's multiyear going to the over as period be to accretive

Daniel Crowley

until a be That's we down really been borrowing cycle I transaction. flow virtuous now which with rate recursive where debt down, reduction that that go this up, we able operations ratings that at haven't rates. of reduction, It that debt circle refinanced comes becomes which on to mentioned from cash cost credit of crest nice expand of cost debt accelerates then can hill lower free and the goes

helped XX the they weren't of Most of divestitures, front. done, with got, stem business so stop the divestitures just deleveraging. over to this or meaningfully the earnings structures the is in we've although average, transaction XXx They we on tide really bleeding

Operator

Next question Bank America. comes Epstein from Ronald of of

Ronald Epstein

has A been covered lot so far.

I question. picture -- the the to bigger mean a expect just what's plan do Triumph What's maybe years? X So for company. see where in you long-term

smaller? here getting just a do almost the keep division, build the point. different you try of like at where turning sale direction? you're could business to Or and the a you in With feels it pivot

Daniel Crowley

run replace to certain out and smaller. news difficult as organically, of the for which a said, public at that point can do company. We at sales. market TPS achievable, off there's revenue. want to level the top I more the in to Ron, line cost the comes This then The get around things other higher company options to begin billion is is, takeout want growth become look don't than it's this and our good rates the and portfolio accelerate necessarily a $X.X could level $XX we latter. below cost million I we do but of the a to we

happy But about going priority X.X That's from our good X%. We're remains first deleveraging. down to news.

investors time go payoff through that we investing recursive generate that can show invested. see the the In between money terms that company, ] to where gap Moog to a [ our so they've the for value that Woodward of go Triumph and got we're cash spent and is going and we've virtuous like got Triumph we earnings really unjustified. and But prove think they've company, the as it. companies cycle in We've the

the then future about nonrecurring. So front, when modular margins discriminated and is are excited new for for because aftermarket. things research that good to contract good long-term business paid We're through We're I going those solutions on paid we're the generate and solutions development. they're we're those getting OEM they'll that's have and why value, enjoy our the go they getting have

been This business becoming is created. know long I've time. how a And this it's in long now. fun is a I game. value

the and You been Ron. can whole us through you've with story, --

strong support very the and So And feed a arm these with positioned maintenance it, right it has owners. that's that been in done AAR, we've a can heavy but dismantling now also product got wasn't plants. with a with distribution repositioned who business any we've the partner and business, structures fun it's

crown what with But better will future. Triumph And actuation controls transaction. gearboxes. leaves interiors, engine and right the of it interiors the this that's is So real in and jewels yes, be

of their core earnings your on what the is our is products, see expanding building driving years' on doing. pivoting this platforms time, in X point to you'll that and think cash that now So reach portfolio, then I about business expanding capable and

Ronald Epstein

And XX% just backlog. question. a maybe guys it. How the you MAX business? of the Got really the short-term of in what, about, it. your impact about thinking Got are more It's then

So there's uncertainty And I do so that short mean volatility about managing much how around program, term. think you in it's particularly material. the that?

Daniel Crowley

with XXX this. his line So I'm do team walking a the do to line alone line. and XXXX, remember it in I've to I'm Boeing at team focused that as And can't everybody on Stan XXX if including close Boeing since, the and calls they to I walked their monthly on ever takes escapes things industry them we have with. because it can suppliers combined deal are generating Deal

awareness, fad chain, I supply driven can. in about I greater to one Nominally, one every important just them, the we the crimping time have connectors think XX%, is is the in way In we for for terms they with whether industry, the every fix to years, X be for but confidence aerospace entire it's It's or with my shoot it conversations and a huge important program. Boeing of program sales, time of do up supporting percent has a a will issues X said, them relearn difficult no got. dynamics. MAX that's but all by that XX%. gone really have disciplines certain or about fasteners to for they've backlog. I a inflection this of our And big we Stan, we're torquing and than

new Boeing in you that like in we the second have the is Spirit employees. where supply a new the where are have and chain make in influx you coming workforce certainly makeup. that familiar. of And pandemic, changes had less or had where is players And companies large One the a out have of coming and change buy, others

quality. with is and those key the them controls to put to in allows employees newer and the that tools the ensure culture arm So place the

the surprise, that going is be shouldn't demonstrated, with issues benefit help those. the you'll partnership -- as the attention I'm the what be then over will doing. time is Airbus catch aircraft and get the steady both And get about that's a of be, it's FAA progressive to not there'll it. to will And Prime's they has getting are there those. fixes And additional inspection going the ramp when exactly read -- a to be Boeing from all a until confident And to but on program. help. they're And going in not levels That's and place,

Operator

Myles is a Research. follow-up question from last Wolfe of The Walton

Myles Walton

one. quick a just Sorry,

quarter benefiting IP to of I sale sure from wanted that comments, year in you that where to it's terms the just in pretty you've I IP last to increases talked quarter sales make that, had think past, of about similar comment, sales. like drop second IP margins. chunky the sort the through of the in fourth is in price selected

Daniel Crowley

Exactly.

Myles Walton

you a for have Do size that?

Daniel Crowley

series to LEAP turned of pushed They last at throttles run reality In product see and and Hey, QX QX. and dip Honeywell of and line carryover course. the at the saying, the and thing ones for think job and which GE do a of I'd a worth more in them I line every us think same are to pent-up say at a there $XX lot QX was a the very others than the our smaller didn't million. from monetizing year, their we a and you're It's products or to And they level on, this. tree million deliveries But is good to operating are we the have of is demand had ones. product looking where the strong $XX lot past, the probably I QX, they then in benchmark Triumph either level. QX company going a of a because out good prove

expect these are carrying of disproportionate their questioning and that not, longer they're If scrutinizing my it require of either that or I bring to level And presidents no portfolio, they're or really suggests products out all items profitable not resources. they're forward. and a aged

in opportunistically to you And to So us that's count fiscal continue that contribution. the 'XX. do on can

Operator

session our Triumph question-and-answer Quarter Group's Conference XXXX Call. Fiscal and Year concludes Earnings Third This

Triumph (TGI) 7 Feb 242024 Q3 Earnings call transcript