Triumph Group, Inc. (NYSE: TGI) today reported financial results for its third quarter of fiscal 2024, which ended December 31, 2023.
Third Quarter Fiscal 2024
- Results of Product Support business reported as Discontinued Operations
- Net sales of $285.0 million; Organic sales growth of 13%
- Operating income of $19.7 million with operating margin of 6.9%; adjusted operating income of $19.8 million with adjusted operating margin of 6.9%
- Net loss from continuing operations of ($11.9) million, or $(0.15) per share; adjusted net loss from continuing operations of ($12.9) million, or ($0.16) per share
- Adjusted EBITDAP of $27.7 million with Adjusted EBITDAP margin of 9.8%
- Adjusted EBITDAP for the remaining Systems and Support business of $39.4 million with an Adjusted EBITDAP margin of 16.4%
- Cash provided by operations of $27.6 million and free cash flow of $22.4 million
Fiscal 2024 Guidance
- Updating net sales to a range of $1.17 billion to $1.20 billion, reflecting 11 – 14% organic growth
- Updating operating income to a range of $100.0 million to $110.0 million, reflecting operating margin of 9%
- Updating adjusted EBITDAP to a range of $157.0 million to $167.0 million, reflecting Adjusted EBITDAP margin of 13-14%
- Reaffirmed cash flow from operations of $65.0 million to $85.0 million, free cash flow of $40.0 million to $65.0 million, subject to the timing of closing of the sale of Product Support
- Pro forma net leverage of 4.0x net debt to Adjusted EBITDAP
“The announced sale of our Product Support business will be transformative for our balance sheet and is on track for closure this quarter which will meaningfully accelerate our deleveraging progress,” said Dan Crowley, TRIUMPH’s chairman, president and chief executive officer. “Following the divestiture, we are right sizing our cost structure to achieve our multi-year profit margin and cash flow targets. By strengthening our balance sheet and focusing on our OEM component, spares and IP-based aftermarket business, TRIUMPH will further improve its capacity to win and profitably grow in the expanding markets we serve.”
“TRIUMPH generated its seventh consecutive quarter of year over year organic sales growth benefiting from increased commercial OEM production rates. TRIUMPH generated positive free cash flow in the quarter, although earnings and cash were lower than planned due to a finite set of industry-wide supply chain constraints which impacted deliveries in the quarter. We expect a very strong fourth quarter that benefits from deferred deliveries, historical seasonality, improving mix and incremental price improvements as well as working capital investments we made in the first half of the year.”
Mr. Crowley continued, “TRIUMPH accelerated new business capture with a year-to-date book to bill rate of 1.34, lifting our backlog 20% year over year to the highest level since March 2020. Going forward, the new TRIUMPH will deliver top and bottom-line growth rates at or above the market as we benefit from a focus on OEM and related aftermarket product lines.”
Third Quarter Fiscal 2024 Overview
|
Three Months Ended December 31, |
||||||||
|
($ in millions) |
2023 |
2022 |
||||||
|
Commercial OEM |
$ |
142.3 |
$ |
120.0 |
||||
|
Military OEM |
61.1 |
61.7 |
||||||
|
Total OEM Revenue |
203.4 |
181.7 |
||||||
|
Commercial Aftermarket |
35.1 |
30.9 |
||||||
|
Military Aftermarket |
38.3 |
39.1 |
||||||
|
Total Aftermarket Revenue |
73.4 |
70.0 |
||||||
|
Non-Aviation Revenue |
7.3 |
9.5 |
||||||
|
Amortization of acquired contract liabilities |
0.8 |
0.4 |
||||||
|
Total Net Sales* |
$ |
285.0 |
$ |
261.7 |
||||
|
* Differences due to rounding |
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|
Note> Aftermarket sales include both repair & overhaul services and spare parts sales. |
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Excluding impacts from divestitures and exited or sunsetting programs, organic Commercial OEM sales increased $30.7 million, or 27.5% primarily on production volumes on Boeing 737 and 787 programs.
Military OEM sales decreased from prior year as decreased sales on military rotorcraft were partially offset by increased volume on other military programs, including fixed wing platforms.
Aftermarket sales include both repair and overhaul services as well as the sales of spare parts. Commercial Aftermarket sales increased $4.2 million, or 13.8%, driven by the continued improvement in overall air travel metrics, favorably impacting both repair and overhaul services and spare part sales. The impacts from divestitures and exited or sunsetting programs on Commercial aftermarket sales was not significant.
Military aftermarket sales decreased primarily on reduced repair and overhaul sales on the UH-60 platform.
TRIUMPH’s results included the following:
|
($ millions except EPS) |
Pre-tax |
After-tax |
Diluted EPS |
|||||||||
|
Loss from Continuing Operations – GAAP |
$ |
(10.8) |
$ |
(11.9) |
$ |
(0.15) |
||||||
|
Adjustments |
||||||||||||
|
Debt extinguishment gain |
(1.0) |
(1.0) |
(0.01) |
|||||||||
|
Adjusted Income from Continuing Operations – non-GAAP |
$ |
(11.8) |
$ |
(12.9) |
$ |
(0.16) |
||||||
The number of shares used in computing diluted income per share for the third quarter of 2024 was 76.9 million.
Backlog, which represents the next 24 months of actual purchase orders with firm delivery dates or contract requirements, was $1.87 billion, up 18% from prior fiscal year end. This increase was primarily on commercial OEM platforms.
For the third quarter of fiscal 2024, cash flow provided by operations was $27.6 million, which was in line with expectations previously provided.
About TRIUMPH
TRIUMPH, headquartered in Radnor, Pennsylvania, designs, develops, manufactures, repairs and overhauls a broad portfolio of aerospace and defense systems and components. The company serves the global aviation industry, including original equipment manufacturers and the full spectrum of military and commercial aircraft operators.
More information about TRIUMPH can be found on the Company’s website at www.triumphgroup.com.
