TGI - Earnings call transcript Q4 2024

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Operator

Good day, and welcome to the Triumph Group Fourth Quarter Fiscal Year 2024 Results Conference Call. [Operator Instructions] Please note today's event is being recorded.

I'd now like to turn the conference over to Thomas Quigley. Please go ahead, sir.

Thomas Quigley

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

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

I'll to Dan, you. turn over it

Daniel Crowley

Thanks, Tom, quarter call. welcome fourth to and Triumph's

exceeded objectives Before details while to year by results. strategic safety of start I'd to fiscal like full highs achieved the all-time financial dynamics the and recapping 'XX the get We or Triumph. for was and a Fiscal into for despite the successful market quarter, we quality our improving year company.

Here facts. are supporting few a

EBITDA support MRO EBITDA and us by free to by improving allow which million carry core points basis OEM increased Triumph net margin improved XX%, by deleveraging years. $XXX for $XX our strong focus to systems by over generating and XX reduced business. we We warrants, outstanding retired Triumph in flow X XX.Xx revenues sold proceeds. total million margins, business our our million. cash adjusted third-party our and our and while systems debt accelerated maintenance We $XXX on by aftermarket

of market objectives. environment, we Overall, our Investor Triumph's aerospace challenging its accelerate towards to ESG years. provided last, expect our on a growth the met and internal and all what journey a the defense multiyear Day in us XXX profitable positions sustainability over our held be we next also or to strong targets. fiscal And successful goals exceeded results We super with long-term cycle in-person attendees coming in over

we quarter March, As while the results pleased for eighth quarter we flow. ended of report fourth organic in delivered post that generating I'm cash that positive consecutive growth sales free to our

Turning in retire the sales and product to of Slide seasonally debt. I'll aftermarket closed million XX%, demand. our business quarter. the driven accomplishments generated over from $XXX We year-over-year support to strong by proceeds X, the highlight sale of organic key We used growth

achieved XX%, We participation backlog its our grew markets. by in platforms, as growth customers of non-aviation rates and of demand. on X% which and sales total We increasing maritime end Triumph a above market company array broad artillery expands is

We cost company also and margin executed to reduction actions across the enhance our $XX million profitability. in short-term out-year dilution reduce

support help we actions Investor portfolio. cash for our long-term our us to Jim and Day, product will the also achieve will presented metrics post earnings These which update at

support QX margin continued cash along earnings in free system were overall impacted Interiors While weakness were were sales our $X charges, with in and earnings, and business. as restructuring strong million flow by overall

to demonstrated interiors the in quarter Interiors demand on Let me mentioned prior are increase coming the expectations volume the due profitability. provide headwinds. taking is we free and flow some continue the in to its to year. perspective previously from external Profitability as improve and update lag XX% cash actions back

to through historical and levels Interiors are free represents restoring less actions. While than we flow following profitability of cash XX% committed to Triumph's sales total the sales, of it

absorb their Spirit cash and additional profit Airbus, generate to overhead. KHI Boeing, winning help and First, work and increased from fixed

ducting XXX in supplied for transfer world-class We work and capacity. trust Triumph are customers Mexico the ready a their a negotiations competitor by our of codecs have sign our to final need plant, to in

Second, we hedges that put place in erosion. for margin the capped peso further

Third, year effort. material Fourth, who raw in lean and increases for raised provider the we doing to productivity prices companies qualification events last offset initiated identified the the have we labor all source drive to affecting Mexico. minimum a wage second through continue business

XXX to productivity rate We recoveries with are increases, and Interiors price labor we that XXX, back additional confident can the and increases historical anticipated levels. on scope, work bring the margins

markets, aftermarket X- and optimistic demand, the including commercial commercial stable a trajectory X-year for the new growth many in and repair remain play recovering we military positive to about programs transport which our Triumph, start we strong development. spares military very rising and As include volume in across budget, underlying drivers aircraft

rose with forward. X.XX benefit driving XX% on top backlog backlog military of line orders our and more than year-over-year, a Triumph's and Triumph's strength will the of XX% respectively, and product year-over-year customer which XX% going by Both commercial on book-to-bill focus engagement. grew offerings

trend systems the are X X, programs in Page gear all all our are ] the on following Page for multiyear made of with and MRO Pylon orders Conversion on the V-XX exclusively shown our growing CH-XX planning Actuation, the backlog the control Navy's Starting Triumph as that and Note products: aftermarket increasing up in overhauls backlog are sales, new through landing top content. 'XX and X our that X continued AXXX tenth the SH-XX spares. over content. [ rate primarily upgrades, in As demand of are noted programs fiscal received systems engine QX in military horizon platforms its the in

entering driving play at while and aircraft the MAX and AXXXneo aircraft There utilized, increasingly XXX are year several landing XXX spares where supply the new AXXX fleets their older heavily cycle actuators. are are dynamics hydraulics activities fleets as here and as overhaul such long-term we

the our and AXXX X. XXX landing a provider Slide aircraft. is gear where on provide both the growth Turning of in case OEM on I Triumph suite the to point aftermarket the entire actuator

services the aftermarket the programs and expanding These gear keep as more aftermarket sales to and foreign activity carry Landing in overhaul rising accommodate were commercial which our also demand. military our and OEM to margins, Xx the we supply is Xx aircraft to year. military in repair rapidly actuation capacity We're often MRO as well. spares we're margins allocating

There the has side others Dorel business the as are military number [ several the positive support and in of and combat Northrop of collaborative new Lockheed Boeing, Triumph developments aircraft. Aerospace with Grumman, a engaged Kratos in on programs and of ], NGAD GE development Martin,

on Turning new product for awards sole-source military of IP to where right, the top in the on Slide Triumph introductions. wins and/or are were Six We indicated our X. slide these the quarter platforms. based

supporting offsetting Triumph's the rose IP backlog. $XXX year-over-year rotorcraft OEM CH-XXK, expected XX% of V-XX the on XX% of more than our that military rose backlog substantial million, runout the to Note which year-over-year strength content on

Recall Regarding based the rates information. market, on family published AXXX is largest this Airbus AXXX commercial Triumph's rates increase XX% remained production year backlog. program third in family and strong growing the with in

to have AXXX increase rates work and higher and Triumph Similarly, support asked of expanded production forecasted to rates scope. AXXX been are

We communicated are not a aware been concerning rate of which chain Boeing's supply planned recent public formally increases yet. their delay to statements have in

delivery actual a rates, given the ability the imagine, for to adjustment of is rate output build function supply and a product and can inventory finished and back flex chain's goods down aircraft you and component up. As

our depending XX% transport fiscal from 'XX million effect X% plan by the targets. Boeing commercial uncertainty has Triumph prior our This the internal the net approximately reducing conservative adopted XX%, and prior programs, fiscal of sales or Boeing guidance reducing assumptions a Given rate between platform. on 'XX $XX on

Boeing's as finalizes stakeholders commercial platforms. all wait share for and Boeing update hustle through will We to production market their we'll second takeaways across and and ramp-up increase continue while sourcing we needs, their

and rate rate as towards We XX-plus rate XX drive the fully XXX by XXXX, they remain on XXXX. supporting to for Boeing's committed protecting and XXX the increases late future requirements

years We the operating have multiyear sufficiently to targets. that for our support X our financial plan derisked is high confidence next

Jim further updated quarter detail our fourth outlook. guidance long-term will fiscal now results, and provide 'XX on

James McCabe

meaningfully FY healthy proceeds year-end. the third-party year XX.Xx a highlighted with our improvement Dan, at the of had of beginning substantial MRO at combined great enabled multiple, Triumph, X.Xx assets by EBITDA of a the net sheet. from for us divesture the use 'XX X.Xx year to of reduce some Thanks, everyone. our to morning, the good tax business leverage from The the was in balance and

product in XXXX, Triumph's the the $XXX liquidity. in In are clearing million on our hidden senior X notes The debt proceeds we from retired million is at net gain cost historical significant assets next our the of due the remaining divestiture value completed that from evidence our debt, of support leverage of runway the is the of business, On maturity. QX, X.XX% sheet. sale the with Slide and $XXX net carried balance

redemption over issued savings. more lien yield XXXX. that million. have million our half not interest $XXX maturity the X% last of our this We or additional over due $X.X for of notice also XXXX. $XXX The million annual an we our reduction notes billion be by from debt We lien will year of XX% net million We've month. significant to second Earlier first our week, next in until reduced $XXX than $XX million with this combined redeemed debt $XXX now first financial complete notes about flexibility a will of

million 'XX is $XXX balance our of FY at improvement Another down pension 'XX. is to or note from $XX liability FY [ XX% ] sheet million it year-end

totaled availability This at lien million redemption $XXX the $XXX million cash. first month. is XXXX year-end, and including of of of to Our prior this $XXX cash announced the million notes

'XX $X.XXX of billion sales $XXX income achieved XX% Slide We EBITDA are volume. FY On margin. by and driven the organic million $XXX XX% consolidated aftermarket of strong representing EBITDA a We delivered adjusted X operating revenue, results. of growth, million

[ grew XX% XX%. up revenue revenue revenue over our During aftermarket XX% 'XX. aftermarket 'XX, aftermarket and FY was commercial Military by grew FY we ]

delivery grow. base This because XX% continuing revenue OEM includes FY manufacture stream our XX% orders with 'XX months. and backlog to and installed we revenue rates 'XX, fleet dates diverse the from profitable, are of up of the service Remember the the growing spares purchase aging in needs down only valuable aftermarket products next within business and when aircraft more delivery repairs. It's benefits the FY a and revenue XX continues that in report was from that new

shipped to in FY to is of XX% last of are the that $X.X program within X grew Boeing XX% the Through revenue, $X.XX scheduled have billion In FY of sales revenue. our FY Approximately Boeing and Boeing also customer we only 'XX. to increased is billion. during customer be backlog billion 'XX, 'XX, XX% diversity. over revenue from revenue. FY other XX% No diversity sales were platform and $X.XX over We've of years. Our our backlog to 'XX

last XX% representing the of income revenue, operating income, million shows quarter results, operating organic XX and growth, margin, revenue, up revenue XX% adjusted which XX% $X Slide revenue XX% margins. adjusted Aftermarket revenue. up in XX% revenue On the and fourth million higher $XX year XX% last from more from in growing, growth solid QX operating more year. on and EBITDA of margin was

down Our on was jet OEM than was QX commercial commercial revenue of more XX. $X on revenue, XXX Slide and by demand million on up million, including $XXX the million aircraft. profitable which is $XX spares, platforms aftermarket which legacy multiple Commercial business revenue was sustained offset for more

offset or Our Slide OEM on year, flow Slide revenue $XX on declines. Cash XX. revenue million million which last military Military revenue over aftermarket is QX XX% was QX military of XX. is up $XX the

CapEx and we of million. year, of cash full generated after cash the from operations million $XX had use million $XX For of flow investment $X free

positive For capital full year flow flow we reduction contributed and and free cash cash million the flow. free generated of of cash significant QX, about in $XXX of flow. operations cash million quarter. flow $XX $XX million from the as Working cash expected, $XX in million

cash flow XX. on comprehensive in the is A Page appendix walk

expect For Slide 'XX year reduction working FY the the FY the growth XX reduction capital of with capital amount prior our 'XX. the working QX in FY in seasonal QX range second On is of in we 'XX, cycles, by consistent followed guidance. of in half

anticipated the of the necessary continuing includes over the of and business in benefit the reductions These and inflation. efficiency that enabled work reduction actions, cost are guidance several $XX of done were million Our the to standardization costs is rightsize by years last fixed net ongoing. has recent and been

in We on shift varies guidance purchase assumed Boeing expectation in a than our the our temporary demand by have current order for which site. based demand, less

longer-term prepared not being temporary are to This meeting our rate obligations to primarily to demand to financial We impact impacts committed longer-term future increases. our shift and our expected 'XX from to or FY targets. Boeing demand and support Boeing assumes is

price increases under ] the and of agreed and includes that value and are reflect and to consideration OEM contract. products $XX FY of [ Our which our actual and approximately unique aftermarket increases and These are in 'XX, quarters 'XX the guidance customers. most cost forecast X also planned environment, million price already current over importantly, deliver FY of complex

redemption For of the XXXX following note balance We during remained the the XXXX this sheet, notes million $XXX month. million assume the year. $XXX outstanding announced

cash assume FY 'XX million. payments in for $XX forecast also pension We funding the of

sales We billion. approximately of $X.X expect net

income expect of We $XXX over is XX% operating about which approximately 'XX. million, increase FY a

expect FY margin, XXX margin over which approximately 'XX XX% $XXX point in million is a FY of We basis 'XX. which over is a and EBITDA EBITDA XX% XX% increase increase EBITDA

our conservative and million flow, OEM cash capital demand we assumptions. free For expect $XX $XX working based million to on

$XX $XX interest cash of $XX million of million, expense of cash expect payments We $XX to CapEx interest taxes of and million, million. income $XX million

XX is upside benefits, recursive our targets. a is the graphic of which longer-term Slide On of to deleveraging cycle

As credit reduced free increase cash we and our to to expense. EBITDA, will means to Less the improve. remaining interest expense lower will debt ratings debt cycle to flow repeats. interest at continue reduce lead refinance our rates reduce lower and and more opportunities debt This

opportunities longer-term to capital our improve structure are targets. our not in that expect We assumed financial

with Our FY 'XX the targets reduction, is 'XX on free operations without drives 'XX presented net yield cash financial flow sales margin, expense and which 'XX the improvements, targets. actual, from potential of robust The even for flow, XX. cash generation, and Slide continuing benefits leverage along free is Sales, net longer-term are interest EBITDA on expansion the structure capital lower not and guidance FY leverage and EBITDA of assumed. FY are the FY

million the $XXX to We our outstanding XXXX conservatively notes maturity. assume of remain

upside pension and plan deleveraging, However, become XX. improvement interest and capital which the as these we cash cash detailed funding reduce year generation by assume consider available deliver targets. Slide they opportunities on appendix will continue the to We as to structure to in accelerate will of

We and opportunities, diverse income ] stronger have are years. On and a FY margin operating profitable balance free our the cash Slide sheet, recent by increases included drivers federal minimize for contribution quarter tailwinds efficiencies. U.S. margin The key revenue are flow margin multiyear includes price net revenue rapid and a solid organic growth. the growth, substantial the billion [ EBITDA revenue to the cash more plan rapidly reduction of significant and generation debt. negotiated the several operating with than from the drive leverage. for expanding expansion, in and and tax assets of continue that taxes backlog cash Centers relative size mix upside driven Triumph In expansion cost multiyear shareholder growth aftermarket $X.X reductions flow cost a 'XX to results on favorable of and with incremental cash margin and previously military a including volume, value lower cost price fourth summary, increases. XX

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

Daniel Crowley

Jim. Thanks,

our facts outlook. few XX, to provide supporting a Turning bullish for Slide I

year 'XX when to fiscal on with long-term cut begin increases negotiated first First, the price effect. previously full is in agreements

gross that year, As XXX margins. million $XX Jim point year-over-year noted, become estimate basis effective price increases contributing to this we over a increase will in EBITDA of

year the demand over business, The finished fleet spares million. in for led inability the and at has X% over experienced sales X growth to rising of last approximately with travel the average and as new Triumph's global aftermarket the years This, a last CAGR years $XXX coupled has is age a which high OEMs repair accelerating aircraft months. the satisfy to XX demand of rising the X

and support MAX, production business. systems the fiscal AXXX publicly third-party for sales within grows XXX. fiscal Triumph's clear, aftermarket million meet OEM XXX family, from Airbus from $XXX than AXXX and by divested the and transport be recently generated commercial Boeing to and their is business maintenance include Triumph's does not shared if 'XX and To IP more 'XX revenue targets

driven to been a airframe-mounted Geared which path, This business or positioned FAA steady additional future. accessory Triumph's V-XX AMADs. has Solutions strong the attractively operating business conversion Turning XXXXs, MRO the color I by on and Today, drives, provide recovery a leveraging XX. system developed products Triumph is IP-driven pylon the including for business solutions is C&D the on geared Slide predominantly in [indiscernible] system.

have the Looking new a that B-XX AMAD, gearbox new South X X to Korea's new will the applications new Saab ahead, new for over AMAD transition we next Gripen the on including AMAD, a gearboxes TXA several aircraft. production KF-XX and years, Boeing

In gearbox quarter. fact, aircraft the KF-XX orders for our we received in the first production

Geared repairs transition all aircraft renewing phases and these cycle, volumes, spares product geared their participates will deployment life the that ensuring backlog. to generate Solutions across of solutions As production,

also in compete long Triumph they are new modular increasingly allow maintaining of motors in which to have sought costly supply replace content and on plans. engaged the link multi-platform space important for next their are active at aircraft components creates and is to extremely innovation, the the propellers. us vehicle retrofit to out They legacy crane, that on is expertise to castings the and additive opportunities and manufacturing in electric our This application future electric subsystems product and particularly as rotors level expanding and and chain. in drive connects

long-term pumps, Slide most our customers, innovation product snapshot address We our current engine digital cyber leading actuators developments customers' and and provide source internal solutions including high-speed controls engine gearboxes, flywheel line compressor These high-capacity financially our featuring XX. of new are of challenges. as of product to shareholder a thermal sponsored difficult IP-based protected new by processors. value a fuel and Turning Triumph's new new entirely

a was year successful XXXX fiscal summary, In Triumph. for

performance fiscal electronic controls and aftermarket cylinders the commercial Boeing have and on actuation our even our flagship hitting positive Building system companies assumptions excellent expansion, we driven we with fiscal through to progress momentum X our 'XX businesses, by 'XX. all on the fully as expect rates. conservative of have operating all on of into We

for We back are third-party on years. The the taking the X-plus spend divested by short business cycle. positioned term financial focused us fundamentals the of start super is unique defense Day, and our and long-term outlook and trajectory necessary put as that in for having position reflect MRO our strong our is and at actions we now success. medium of what the Triumph next offset to to to industry, commitment well and continued deleveraging contribution aerospace we encouraging Investor performance accelerated believe market The reduce our our the our for presented the will remain

and I questions the are for and credit team you with My and future outlook, to take company. about We're interest an improving lower any improving excited now. growing backlog and our happy demand. carry have market debt One

Operator

[Operator first David Barclays. today's Instructions] Strauss comes question And from with

Unknown Analyst

actually interest than is about Corn This I to with the Josh could on you thought longer-term divestiture. the be savings forecast. ] [ lost David. for We ask wanted greater what

the So sales went why cash the percent forecast conversion sorry, I'm flow free down? of free -- cash or flow

James McCabe

It's notes McCabe lien the that keep this assumed down happen we They're outstanding. going month, current $XXX Sure, to $XXX first be multiyear, that In will million And to paydown Jim additional here. we're about the earlier after the conservatively Josh. million. X% notes. announced will

I we They reasonable moving balance sheet, improvement over do be be conservative opportunistic put a see So want on and but structure, 'XX. period, capital believe there especially we're structure occur, to to forward lean multiyear assumption forward may and for the in trying on for But don't to will FY going cap it. the We're opportunities will that. about we improvements.

of to be that lower and cycle higher your should too, from your some recursive that put that. of EBITDA, because getting in slide we're leverage, we're to I forward fact, capital with credit, looking investors, doing able lower improved your cost feedback you saying, In

Operator

Noah Our next Goldman from comes question Poponak Sachs. today with

Noah Poponak

Jim, just staying there.

flow by slide you $XX billion So free had $X times Day, at cash X% flow, cash The free fiscal is -- the margin 'XX Investor million. the million ] [ target. multiplied revenue $XXX here,

in said you hear just So product you're -- reduction. on it's expense the interest layering out pretty significant a what comes maybe reduction. and support I there then how

bridge can pieces the So $XXX to million million? $XX break you or from just out

How but the came the What much out profitability just later? are in actual less came $XX moving product specific the support pieces come much expense interest $XXX from out? much interiors? million? million How out could to How is

James McCabe

Yes. did reduce Thanks, was substantially the divestiture debt of substantially Noah. as It the The to effect well. reduce leverage.

we interest commercial the a up above but did was albeit it business goes down give party. a margins, third midpoint and that growth higher slightly of was it's So our because aftermarket,

a to we lower saw the XX% we our given up we what a just in sales cash more haven't flow EBITDA, but a Boeing on some and follows. Working or and improvements was moving in conservative get capital a X little base assumed the year growth, started the rates. So capital uncertainty around from slowdown And of the forward, any assumptions may be OEM later structure. we of

lower I a Investor have cleared So little runway until content, has lower any a for and we exact maturities higher much don't credit, but the think deferral I Day, growth XXXX. but margin was of expansion the reconciliation and bit much traded to better back portfolio what we leverage, IP that

Daniel Crowley

just that year-over-year when robust had Day, Boeing rate I'll was Noah, at the more looking Investor recovery. we add,

But those and cash backlog as convert in good So and as assumption, book-to-bill 'XX to fiscal up news follow. the and them we've is orders been are 'XX conservative will and we you our volume noted. sales, drop

Noah Poponak

'XX. just interest, that all to mean, little get piece, guess It's I revenue different working the provided, numbers me to cash makes it product I in for Yes. hard terribly EBITDA revenue the a sense. -- reconcile pension, on that cash minus CapEx, I 'XX. 'XX that the But the that. -- adjusted Okay. tax, guess isn't you doesn't the support capital

use there's like as 'XX well. it So working in sounds capital

capital you understood cash working were than going of expecting? meaningful pretty as to larger it it's be working going what's with some guess a I improvement Because on you maybe capital that had I initiatives? source

James McCabe

several coming, be be. and we it going slipping thought needs, protect although from was we ramp, which it have Yes. working to quarters we We have see capital to where do may the

prudent inventory the about we're going to there, balancing So be is still incoming that. and

I what we what think there on the the major to that cash show from be a XX flow it's Slide FY did slide drivers through increasing helpful because how bridged we is the you and might 'XX bottom was to 'XX are.

by EBITDAP expansion, capital the tax have orange that the large and the then pension of you usage, savings which working offset and funding bar first It's a that's bar, is So there, the bar. little too. in there's blue interest and is bit

So 'XX components those cash, we and can you up are of follow 'XX could you give the components. to the with more out public we to information, point and

Noah Poponak

Okay. and the ask want Great. your for I on the then I And quarter and thing month you in into you forward. there the detail Interiors know you just quarter higher there provided some the third quarter. I quarter when a guess, was projection margin last to -- about. you I give going that much heard the gave reported fiscal

the forecast your be lower a just than lot And fundamental how guess, to of circle what the you able behind already that to much of actual performance drivers I so with quarter are? can back the is you?

Daniel Crowley

and No, and thought better did we deliver but do doubt they ] And disappointment. there's the sales. [ on earnings, they cash no

us That's fill X there, factory. fill with been sure why engaging factory. a is that one That there team leadership making running we've in new the ducting. factories in through help will intensively working there's that Recall, with going helped their absorption. of down to empty, to all [indiscernible] one is Boeing got we've place cost, So full big they're

for So outstanding. going good to we that plan. we're We done But volume. get to here well it on-time things do back before. Operationally, makes that and us that's cost done volume. on it money the it's Quality with side a going know to on is be as to to was, more we're business. a some deliveries going it really we've if outstanding, lever hadn't where on And key have returning cost more

So quarter. results yes, the disappointing financial in

address required doing cash. is we're up the I to think the and But in are key actions and sales the Interiors earnings signal coming

Operator

And our Baird. Arment next comes from today question Peter with

Peter Arment

highlighted pricing terms and cut $XX for in Dan, Dan you can Jim. the to Triumph available of highlight still pricing million in, that year new in starts on -- you going where forward? that what's opportunities for this

Daniel Crowley

It's presents reach opportunity may want if of agreement lead they and Yes. LTAs every elsewhere. us. with that an to negotiate can't for remind these get LTA choose question an that OEM, we times because source to new you a we we this resets I'll outside

get they doesn't end. negotiating contracts but we have it X LTA stick average the alternative with through, contracts. duration thing is, the is there half renews incumbent. And roughly don't Sometimes our years. because it, around to about no of and say, to I'd really But is gone as extend It the contract

This is with And We X-year have continue than some sort typical. XX-year rather review we is of the the ones, schedule. is X out that doing we we years opportunity some to have something something ones, of it it runs Board. as source a

see another reasons all when customers' the of changed our ups assumptions we have for longer apple. price we or be don't list or of in a wait we LTAs the have And the might We middle changes rates at why LTA of get reset, contracts. to reset. that some of to There always term dropped because so bite in those underlying of one the need

So the ahead. It there's would we're although through I say LTAs, of initial complement end. halfway doesn't about more

Peter Arment

-- modeling you guidance, the line thinking first or versus annual maybe half, whether given then, That's like just helpful. half the comment just top you're how to perspective, cash on a maybe Jim, second you want flow just but cadence? free could from us you've And

James McCabe

same first the the I strong we casual working in be to to the generation this generation quarter, quarter. Yes, capital Peter. mentioned in range cash is quarter million Sure, use first in build the my cash $XXX used prepared the in we're that again. cash But every going QX, It's going year. then remarks first And of be QX in be of the neutral quarter. and for kind and second the kind

year as in but aftermarket capital same is well. profile by stronger the the we've demand prior years, the driven working at some of So primarily seen end

that's So it forecast. if Boeing improve our are could rates profile, higher discounted than the cash and the

terms to know in the to the the and a the quarter-over-quarter, to basis strongest, in in per being as cadence, to with improvement know first In like expansion on a the margins. year system quarter the margins with most because similar quarter but I cadence, that's of talk the quarter business. of continuous through XXX ramp particular the point and last people XXX the support fourth margin of year I'll margins Similar

we so comps, business, previously quarter and strong ] on we and moving some could than the should now some rates, And got and do with So be you [ continuing they forecast. explaining can that better favorable posted luck you've with Boeing good, our history see the aftermarket by forward. the

Operator

from question next with our Seth Seifman JPMorgan. And comes

Seth Seifman

I getting fiscal in expectations and to about for And in Boeing it year, in prepared their long-term on was But still I 'XX beyond to Boeing baked talked I this think sounded like 'XX. published beyond Airbus question, wanted there plan. to the rates. the rates check the you thought the into some conservatism response Noah's remarks, in

have curious what fiscal kind baked XXX into So XXX that just and of kind of rates 'XX? you

Daniel Crowley

Thanks, Yes. Seth.

some change. like. a a very digested closely done track [ about U-XX the that. we look to about dropped called might they That's programs and modest what new Boeing. media The So They've messaging there's XXX, a ], drop in XXX, X they're that with schedule that we've have The new schedule.

me XXXX program. from it's the build back level Seattle aircraft. that on deliverable It encouraging line in to quickly of shifted took XXX, aircraft see very because the program I In flight to quarter, toured happening building that's the fact, the and building test really

they out. We don't that's XXX, a it yet. The schedule have new have coming

our to on all adopt, we own than we a when revenue Boeing best And the programs have of I in hit. conservatism we as past, with $XX and mentioned, go So million degree together a we higher the that. about think, take have it's estimates

entering. into find in we're in 'XX rates forecasting are, fiscal in 'XX Now get XX may 'XX. fiscal we fiscal XXs XXX and the that low We're the hit XXs let's say, that that the to and

straightforward, Seattle that more I you they and revised give I address spent quarter very want of for analysts XXX that of that with But FAA and describe so [indiscernible] add as would forecast. Pope I provide update day us and the go. the rates, to programs. plan the metrics to update their how see in that can these next We'll on investors until full the very all to Boeing basis a of we the our plays we'll leaders, our of it's ask raising and every we out that all accurately their schedules also Supplier to I'd at are quality the that XXX their And out, tracking them is credible. one and heads Conference and to detail, all their Stephanie concerns, in listened see

would I on you you it makes and reasonable think increase you're that person continue any It's metrics, those improve things the sense towards that -- look to to if say, at production. clear

really think I this So issue. very his I news have are I watching beginning confidence morning track were spot my confident, Boeing doing metrics. should this right started that about morning of I a [ of journey on the Spirit. talking really And say, where And on it's Wittiger the things that things. with I'm doing also Michael ] these does comments the the

CEO was get here do that. forum a folks hear I'm level encouraging as detailed of don't hear process out there. workforce to tooling, of PCA]. the It Boeing has member report that's the I very them automation, monthly to engagement aerospace I that launched, happening on calls know engagement, a on the in [ improvement quality very the with phone

they're what the doing. they'll get on once XXX And gate, demand. to they think able that more clarity know I provide through be So I FAA

is have most But don't assumptions. hole like say, to And to adopted expect come we to and our this "Hey, investors we've thing away I'd a that important call analysts to that we've back from it's conservative you and actually forecast. take worse" got the in and

Seth Seifman

the and as very through That's year, color. helpful. you that terms follow-up, end very That's helpful if just Okay. sales baked missed are run market can of into remarks. then this apologize for growth prepared rates a forecast this? during the the And But -- I I in this

Daniel Crowley

that top The you're the are -- is line, a that rates asking? into growth on what baked revenue

Seth Seifman

Yes.

commercial OE OE In aftermarket? the aftermarket, military terms of the

James McCabe

long-term overall. growing sales, in the as exactly the aftermarket of We what of X/X it's it's markets but X/X therefore, though trends didn't rate, growth are Seth, which give cash you because certainly details it's tell our exactly that a And Sure. I by and that's FY aftermarket, would continued in 'XX profit Jim. important of and even trend our flow.

So of sales, X/X profitability. our only our of X/X while OEM rates important, are they're

see OEM of as even well So continued starts in the on growth, production strong the ramp. as to think improvement side some aftermarket we military I and

Operator

comes next Rumohr question from Cowen. today von our with Cai TD And

Cai Von Rumohr

that How So is because the much inflation And your price mentioned hits fiscal of Because hike. impact obviously, 'XX? of what folks you is are higher. you that giving net that? million $XX actually

-- hits what's So how the impact? the and net of it what much are

Daniel Crowley

of is lay ups There'll ups out a out point in fiscal multiple further the It's Jim, year add? years. in number basis the the not be that further or That's lays savings, price in gross And price the contribution net savings to over reflected fiscal years. hit on margin our All a expansion. anything the XXX price that year. number. then over

James McCabe

Yes.

XX% coupled made price margins annual but expand that all As Dan inflation the $XX to, 'XX of able with -- we've there said, that, gross. of year-over-year the 'XX reason not to as reductions cost the offset million the we're that. is or to XX%. from FY $XX are there you to from And improvement some And alluded Cai, of price million that FY is is

as decreases that accretive shown point alone. improvement. cost there margins to it's necessary, basis are all but to But for accounted could also Largely, price by XXX that be the offsets by the is

Cai Von Rumohr

these and make XXX? you might lot give Boeing Give in sitting while we your going? color of on are then some tell color Can rates. yet going And AXXX can't to XXX, where -- you the is some like exactly us Terrific. me, you today where take XXX excuse and inventory of us do that terms position? have of be you you them And some guess a a what's can around? where on mean, I

Daniel Crowley

full So we to fiscal year, on X up in last 'XX. were around rates our headed XXX, and were XX

think last was that's and ended finished can fiscal about XX% mid-XXs around it decrement, of short we're factory, readily kind and order prior getting XX. low will were the the does solvable. year in the it that the make of a levels. why we conservatism. rate all into work in XXs, vary XX% we've on number working that sort But headed in goods the inventory that And . On issues be that's they're XX%. I adopting But now the think a assumption. based still now year, to term, in the varies of the on That of and that are there through Boeing year Cai, we I XXX, conservatism by to that again, -- adopted process and

we XX I order how to over listened investors it and working that X if think will have play hit it months how than more typically and conservative can plan parts capital you that's but to says the with really our out, need the advance. X a analysts really to you affects is" "Triumph, we've in that years, next confidence

we I'll we middle to profile at the capital that build and of, why ordering of the contributes working few higher quarters. part last to call, year -- were So over that's in last that reported the in that

the we're Does Boeing working to we that breaks and light make to more up FAA. reflect green material can that with to assumption, suppliers the spin help? reverse that while conservative higher is putting our our incoming slow Now down to the that to that rates once sure

Cai Von Rumohr

in And of flow, free million helpful. your What's guess 'XX. their $XX mean, talking status as we is of is That acquisition a X-part my one I answer? regarding look the this at I the last what's question. hair And Yes. Stuart? suit you're cash cash flow

'XX, cushion of a we Any look guys if you more? about something your wrong, goes have to really flexibility event. if not 'XX, we a actions any additional that's sort exogenous at kind if improve so take would And an huge thoughts of

Daniel Crowley

no that's the its HR there's So take it, I'll way through litigation. okay? shot at legal but a really process. multipart a So on the question, That's update working

continue ourselves. vigorously We to defend

the portfolio of and was it buyer responsible Stuart has As you sold for larger transformation. in is part fact business been XXXX, recall, our July of the the since was operations

as that sale the our by well as included amounts And terms agreement the claimed potential that limit exposure [indiscernible].

it there's because [indiscernible] is to the and complex point in out. there. seriously. how past So we anything And to they when the on the Boeing, those. we've resolved we've XX-Q the lay close issues and really takes level take business with to experience Boeing happens commitment This with with I'll you And detail. to quality attention of not our a be [indiscernible] that structures we a business, new not had

cap But we've to exited liabilities legacy off work that business, to to and continue in structures going the we're area. the

but bottom year I'll -- [ ] our So don't her to call any, we financial it, the expect fiscal major in litigation. from line. impacts That's

Cai Von Rumohr

flexibility. And the yes, last one about, the

Daniel Crowley

you're adverse something them? would we saying if So were how happen, to fund

James McCabe

We X.Xx from 'XX, Yes. on at one down flexibility. we're leverage came X.Xx. X.Xx by point Cai, to and on just

capital more solid maturity we a we So already with to for with have for ever the ] should and purposes. expect raise [ purpose. But have have the flow that until we balance positive need XXXX. availability we forecast. -- sheet it And conservative on room any don't We cash

whether fund or ability business, in more of to So balance from it's need we if we to confident any feel sheet the could. we existing raise capital, the our needs

Operator

with from And our next Walton comes question Research. Wolfe Myles today

Unknown Analyst

on You for got [indiscernible] Miles.

I amount maybe the start with in So $XX reduction if that something of 'XX? Is just expect million cost the fiscal benefit you actions. be sort a to whole

James McCabe

amount That's of the gross low the reductions.

costs. all our SG&A probably range and $XX of the something net benefit, of year-over-year, inflation, were or targeting $XX we million of overhead So you to and in see fixed million

inflation gross $XX million XX% the is reduction, we're million probably -- range. million of year-over-year, be for looking going to which $XX $XX So to net

Unknown Analyst

costs Okay. Any think about cost And are the year? in took to quarter? additional there you $X -- achieve this to million

James McCabe

it having it [indiscernible] third-party has rest severance anticipate of be to of already that it. the costs those And actioned I most is been that think restructuring reduce it I don't -- of we're has Not without some, associated able charges. could but There anything with large.

Daniel Crowley

very to and through don't they adopted that because far closely on in that go assumptions rates do with we've rates. we at have look cost sweep are We're reduction loads have in back on That our are. way, number we and fallen based another cost cost the where to outs would the Boeing portals I make holding conservatism tandem so further. sure those the watching that demands their Yes.

schedules the of fact, putting released. are that -- in better inputs we're stick In their the than are to portal to some Boeing's the early those conservative but assumptions, formal going until our

Unknown Analyst

on Okay. too just And fully off. I earlier, asked interiors of far guess this sort I know still weren't clear wasn't happened. was what I but exactly Sales and

sales that to on to Was just there was to completely that from found mid- off of through? teens came cost higher-margin drop high sort surprised didn't the if something side trying understand the So these some down X%?

Daniel Crowley

from they Spokane -- Mexicali. So we had our plant Zacatecas work they in transferring were down to and were --

cost some they're off. their of the and off, predictions of that was on was And therefore, estimating cash moving work earnings of and

for that the we've Interiors fixed accurate EACs Now business. forward and going have we'll

continued that cash. and on so and have fact, drag hedges alternate and Those we've didn't, And and things we actions. also sourcing adopted they those saw we in margins have gone in sooner established mentioned to cut in liked would I a

And of a from bit there The like our take before. is away the to I'd it's know higher. So Interiors thing get XX% when we've how done were business. to been that out timing volumes we thing. it a of We've

path Boeing increased clear Airbus challenges just on the higher We gets others, KHI using past to with with the the we're current now negotiate like the XXX, time Boeing rates scope a but have Spirit, programs AXXX. and to once on not

Mexico, back where this we're one type quality, we be. get the strong of back in is all So underlying the strong in we we're of we world operating to products, to can were. cost advantages on-time get the delivery. factories to that to And we It have with the actions inducting confident largest where produces in doing used the installation that

Operator

next our Kahyaoglu today And Jefferies. Sheila comes question from with

Sheila Kahyaoglu

think to in mind, and few you're where the XXs. versus play MAX mentioned high conservative you internally I rates thought don't is I on you'd a to you're XX% have if which a being the or going questions. you you cut be Dan, producing, just here. cleanup mid-XXs

And MAX? free million in guidance XXX? 'XX. fiscal So imply item so And capital of that usage XX assumes you cash your the flow, a month for does $XX and that MAX on on are assuming or all working the is

Daniel Crowley

product they've the historically, on back the it build start for hit can turnaround few supporting know different don't are at then because and and they rate consumption largely capital. and unlike in discrete we've Jim the got Boeing XX. rates the I'll -- The tricky working supply slides, rates I it's and spirit us want that a us because -- So up has factories their X rates allowed rates to different higher are ramp XX run is because to that chain at to than go idle. And to that

reduction, it's the our board -- it proposing but it the does we to and the of -- we'll XX%, some We we you product. 'XX clarity rates not to Boeing, see not a XX%, once guidance assuming across by by vary to provide commodity, we're what XX% MAX. from the on factories So they're But in lower about get fiscal are waiting a others.

we handicap and thing. handicapped Jim? If you the it right. But So think we've right see it, I can we done how

James McCabe

rates And $XX having forecast. and Sheila, capital, and inventory shipment the working on million the for there's year, by usage to the that in is full million assumed range $XX largely lower driven

inventory some But for that contracts, So we capital the part rate and have that's to working usage. for ready we'll for reason be ramps. still of our maintain

Daniel Crowley

Yes.

supply the can Boeing or Just We back readily. rate a implication cause decision themselves cuts we negotiated more and workforce and because process, to later that color pull plants we that with don't supply others. lend with without And whether product the partner back. Sheila. than some ramp more product as a so to problems more the by they're little Boeing throttles comes some Triumph's products bit chain there, It's price

today sit position here's a building the process, down, chain. numbers. So the be then commodity to through in they we of to commodity, clarity supply go aggregate But through at. we're give you what and I've to we'll this to by need given need We get need to say, sort

Sheila Kahyaoglu

for on the Sure. XXX 'XX, maybe 'XX talk when You basis you mentioned fiscal productivity. And net points? then margin about

is does off about imply a price So price? that net X% gross X%

James McCabe

I in and in material is don't there's have contribution, positive but an the That sounds reasonable costs net number for particular. contribution, of of range the a for the the inflation exact assumption.

Sheila Kahyaoglu

Okay. question, set just And level last everyone. then to

product on the So is divestiture line guidance, margin and long-term outside organic support? of the an top change of there

Daniel Crowley

going to better to we're same Yes, we're isn't. back set it's because really goal financial is on but get margins. or of Again, hit beat but our still on like to conservative striving hell the slightly XX% TPS, year. towards but that's to a our EBITDA that's that's there been still objectives there assumption, the profile for think XX is very good trajectory sticking this to the no, it, guidance we're we're So year. work a And and -- to and we the be it number,

back And to achieve then slides. to the in -- profile to Jim's laid XX get out XX is

Operator

Our with ] next Securities. question [ Truist Strother from today comes Sam

Unknown Analyst

of within Ciarmoli this Could potentially just On of you any that potential a provide in military little on kind I quarter. weakness was detail maybe of next morning. for Mike timing improvement year curious, the the pointed this bit but to OEM cadence? you following

Daniel Crowley

aggregated sense that numbers and of in that the programs wins I new off-line we and the to to think contribute military that that gave we're recovery, sort there's a going have in only do to different space. then

go back take we programs, through X we in and they're all are XX backlog to military stable. But chart rate are changes have, the that that the may I and mentioned So rates if program the backlog that -- shows have action. it to you all our generally

management engine power additional We're in as the public provides on F-XX. which pursuit APU the about looking scope that as our the software to that generators. are ] thermal that system, That now. a and tailwind I'm they subsystem they will us well updates. expected once functionality for large some to on hearing of XX finish that is their would be support starter a GO is We're what of their right on month, [ cooling F-XX, for a aircraft go

production, the and then transitioning from for mentioned the They we are the to time that programs -- development KF-XX. of Saab, recovery. own all So have ramp-up T-XA, their line

rather off if answer provide be it than some we components of military off of it'd I individual recovery better the cup. summary the So the think if

Operator

question It [indiscernible] comes final connection. -- on it comes today actually, we apologize. Epstein the were question -- from last And from Ron like I looks

close So at call. session we're point, today's to the conference question-and-answer this and going

Thank you for attending presentation. today's

lines, a You have may your disconnect wonderful day. and now

Triumph (TGI) 23 May 242024 Q4 Earnings call transcript