Attached files
| file | filename |
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| EX-99.2 - EXHIBIT 99.2 - FY2017 Q3 WEBCAST - TRIUMPH GROUP INC | exhibit992triumphgroupin.htm |
| 8-K - 8-K - DATED 2.2.2017 - TRIUMPH GROUP INC | form8-kq3fy2017earningsrel.htm |
Exhibit 99.1
NEWS RELEASE
Media Contact: Investor Relations Contact:
Michele Long Sheila Spagnolo
Phone (610) 251-1000 Phone (610) 251-1000
mmlong@triumphgroup.com sspagnolo@triumphgroup.com
TRIUMPH GROUP REPORTS THIRD QUARTER FISCAL 2017 RESULTS
Reaffirms Fiscal Year 2017 Revenue and EPS Guidance and Updates Cash Guidance
BERWYN, Pa. - February 2, 2017 - Triumph Group, Inc. (NYSE: TGI ) (“Triumph” or the “Company”) today reported financial results for its third quarter of fiscal year 2017, which ended December 31, 2016.
Third Quarter Fiscal 2017 Results
• | Net sales were $844.9 million. |
• | Operating income was $55.2 million; excluding transformation related costs of $28.5 million, operating income was $83.6 million, reflecting an adjusted operating margin of 10%. |
• | Net income was $29.3 million, or $0.59 per diluted share; excluding the aforementioned costs, net income was $50.1 million, or $1.01 per diluted share. |
• | Cash used in operations was $41.4 million, a 12% improvement from the second quarter of fiscal 2017. |
• | Free cash flow use was $37.4 million, a 24% improvement from the second quarter of fiscal 2017. |
• | Reaffirms revenue guidance of $3.5 to $3.6 billion and earnings per diluted share guidance of $3.15 to $3.45. |
• | Adjusts fiscal 2017 cash use guidance to $190.0 million to $210.0 million due to higher working capital requirements related to major development program. |
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“Our third quarter performance reflected a continued focus on working capital initiatives, as well as improved margins in our Integrated Systems and Product Support segments, which partially offset the impact of anticipated volume declines on legacy programs,” stated Daniel J. Crowley, Triumph’s president and chief executive officer. “Our new business pipeline and win rate continue to improve, and we are pleased to have added several new customers in the third quarter. We’ve completed many of the critical steps of our strategy over the past three quarters and remain focused on transforming all aspects of our business in order to deliver value to our shareholders.”
“We are executing our One Triumph transformation strategy and are on track to exceed our full year cost savings goal of $44 million. Additionally, we announced definitive agreements to divest two businesses as part of our ongoing efforts to streamline our portfolio and strengthen our balance sheet. As our Precision Components segment works through its restructuring, we were pleased that the segment’s Interiors business received the 2016 Partner of the Year Award from Mitsubishi Heavy Industries.”
Third Quarter Fiscal 2017 Overview
Net sales for the fiscal third quarter of 2017 declined 8% from the prior year quarter net sales, including $1.2 million of incremental sales from the October 2015 acquisition of Fairchild Controls offset by $4.5 million of revenues related to the second quarter divestiture. On an organic basis, sales were down 7% primarily due to production rate reductions by customers on the 747-8, G450/550 and C-17 programs, changes in model mix, decreased demand in commercial rotorcraft and foreign exchange rates. These factors were partially offset by increased production rates on the 767/Tanker program and stronger sales in the Product Support segment resulting from key contract wins with regional and commercial operators for components and accessories.
Operating income included $14.1 million of restructuring costs and $14.4 million loss on the pending sale of assets of Triumph Air Repair, the APU overhaul operations of Triumph Aviation Services-Asia, Ltd. and Triumph Engines-Tempe. Cumulative catch-up adjustments on long-term contracts were a net favorable $2.1 million.
Net income for the third quarter of fiscal year 2017 was $29.3 million, or $0.59 per diluted share. Triumph’s results included the following:
($ million except EPS) | Pre-Tax | After Tax | Diluted EPS |
Income from Continuing Operations (GAAP) | $35.5 | $29.3 | $0.59 |
Transformation related costs: | |||
Loss on assets held for sale | 14.4 | 10.5 | 0.21 |
Restructuring Costs (non-cash) | 3.1 | 2.2 | 0.05 |
Restructuring Costs (cash) | 11.1 | 8.1 | 0.16 |
Adjusted Income from Continuing Operations (Non GAAP) | $64.1 | $50.1 | $1.01 |
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The number of shares used in computing diluted earnings per share for the third quarter of fiscal year 2017 was 49.4 million.
For the quarter ended December 31, 2016, cash used in operations was $41.4 million, which reflected continued investment in key development programs and restructuring efforts. This was a $5.8 million improvement from the prior quarter.
Outlook
Based on current aircraft production rates, the Company reaffirmed its fiscal year 2017 revenue outlook of $3.5 to $3.6 billion and full year earnings per diluted share guidance of $3.15 to $3.45. This guidance assumes an effective tax rate of 18% and does not include any gain/loss on divestitures.
The Company is adjusting its free cash use guidance to $190.0 million to $210.0 million from $100.0 million to $120.0 million due to higher working capital requirements related to a major development program. The Company’s current outlook includes restructuring costs and benefits but does not take into account any divestitures.
Conference Call
Triumph Group will hold a conference call today, February 2nd at 8:30 a.m. (ET) to discuss the third quarter fiscal year 2017 results. The conference call will be available live and archived on the Company’s website at http://www.triumphgroup.com. A slide presentation will be included with the audio portion of the webcast. An audio replay will be available from February 2nd to February 9th by calling (888) 859-2056 (Domestic) or (404) 537-3406 (International), passcode # 51789715.
About Triumph Group
Triumph Group, Inc., headquartered in Berwyn, Pennsylvania, designs, engineers, manufactures, repairs and overhauls a broad portfolio of aircraft structures, components, accessories, subassemblies and systems. The Company serves a broad, worldwide spectrum of the aviation industry, including original equipment manufacturers of commercial, regional, business and military aircraft and aircraft components, as well as commercial and regional airlines and air cargo carriers.
More information about Triumph can be found on the Company’s website at www.triumphgroup.com.
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Forward Looking Statements
Statements in this release which are not historical facts are forward-looking statements under the provisions of the Private Securities Litigation Reform Act of 1995, including statements of expectations of or assumptions about financial and operational performance, revenues, earnings per share, cash flow cost savings and operational efficiencies and organizational restructurings. All forward-looking statements involve risks and uncertainties which could affect the Company’s actual results and could cause its actual results to differ materially from those expressed in any forward looking statements made by, or on behalf of, the Company. Further information regarding the important factors that could cause actual results to differ from projected results can be found in Triumph Group’s reports filed with the SEC, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2016.
FINANCIAL DATA (UNAUDITED) ON FOLLOWING 10 PAGES
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FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(in thousands, except per share data)
Three Months Ended | Nine Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
CONDENSED STATEMENTS OF INCOME | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Net sales | $ | 844,863 | $ | 913,866 | $ | 2,612,885 | $ | 2,828,278 | ||||||||
Operating income (loss) | 55,166 | (126,250 | ) | 172,379 | 91,663 | |||||||||||
Interest expense and other | 19,698 | 15,792 | 55,721 | 49,539 | ||||||||||||
Income tax expense (benefit) | 6,136 | (53,393 | ) | 32,786 | 6,429 | |||||||||||
Net income (loss) | $ | 29,332 | $ | (88,649 | ) | $ | 83,872 | $ | 35,695 | |||||||
Earnings per share - basic: | ||||||||||||||||
Net income (loss) | $ | 0.59 | $ | (1.80 | ) | $ | 1.70 | $ | 0.73 | |||||||
Weighted average common shares outstanding - basic | 49,329 | 49,228 | 49,294 | 49,213 | ||||||||||||
Earnings per share - diluted: | ||||||||||||||||
Net income (loss) | $ | 0.59 | $ | (1.80 | ) | $ | 1.70 | $ | 0.72 | |||||||
Weighted average common shares outstanding - diluted | 49,440 | 49,228 | 49,421 | 49,312 | ||||||||||||
Dividends declared and paid per common share | $ | 0.04 | $ | 0.04 | $ | 0.12 | $ | 0.12 | ||||||||
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(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except share data)
BALANCE SHEET | Unaudited | Audited | ||||||
December 31, | March 31, | |||||||
2016 | 2016 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 35,461 | $ | 20,984 | ||||
Accounts receivable, net | 307,853 | 444,208 | ||||||
Inventories, net of unliquidated progress payments of $109,334 and $123,155 | 1,474,054 | 1,236,190 | ||||||
Prepaid and other current assets | 23,564 | 41,259 | ||||||
Assets held for sale | 77,235 | — | ||||||
Current assets | 1,918,167 | 1,742,641 | ||||||
Property and equipment, net | 820,177 | 889,734 | ||||||
Goodwill | 1,407,532 | 1,444,254 | ||||||
Intangible assets, net | 605,248 | 649,612 | ||||||
Other, net | 107,796 | 108,852 | ||||||
Total assets | $ | 4,858,920 | $ | 4,835,093 | ||||
Liabilities & Stockholders' Equity | ||||||||
Current portion of long-term debt | $ | 187,731 | $ | 42,441 | ||||
Accounts payable | 403,921 | 410,225 | ||||||
Accrued expenses | 561,817 | 683,208 | ||||||
Liabilities related to assets held for sale | 14,125 | — | ||||||
Current liabilities | 1,167,594 | 1,135,874 | ||||||
Long-term debt, less current portion | 1,470,649 | 1,374,879 | ||||||
Accrued pension and post-retirement benefits, noncurrent | 599,089 | 664,664 | ||||||
Deferred income taxes, noncurrent | 82,322 | 62,453 | ||||||
Other noncurrent liabilities | 558,450 | 662,279 | ||||||
Stockholders' Equity: | ||||||||
Common stock, $.001 par value, 100,000,000 shares authorized, 52,460,920 and 52,460,920 shares issued; 49,557,751 and 49,328,999 shares outstanding | 51 | 51 | ||||||
Capital in excess of par value | 843,607 | 851,102 | ||||||
Treasury stock, at cost, 2,903,169 and 3,131,921 shares | (184,668 | ) | (199,415 | ) | ||||
Accumulated other comprehensive loss | (386,471 | ) | (347,162 | ) | ||||
Retained earnings | 708,297 | 630,368 | ||||||
Total stockholders' equity | 980,816 | 934,944 | ||||||
Total liabilities and stockholders' equity | $ | 4,858,920 | $ | 4,835,093 | ||||
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(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
SEGMENT DATA | Three Months Ended | Nine Months Ended | ||||||||||||||
December 31, | December 31, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net Sales: | ||||||||||||||||
Integrated Systems | $ | 256,080 | $ | 271,849 | $ | 758,803 | $ | 791,901 | ||||||||
Aerospace Structures | 304,235 | 346,639 | 956,114 | 1,127,230 | ||||||||||||
Precision Components | 226,294 | 250,284 | 740,354 | 781,250 | ||||||||||||
Product Support | 87,292 | 78,127 | 257,317 | 226,649 | ||||||||||||
Elimination of inter-segment sales | (29,038 | ) | (33,033 | ) | (99,703 | ) | (98,752 | ) | ||||||||
$ | 844,863 | $ | 913,866 | $ | 2,612,885 | $ | 2,828,278 | |||||||||
Operating Income (Loss): | ||||||||||||||||
Integrated Systems | $ | 51,596 | $ | 52,321 | $ | 145,379 | $ | 153,978 | ||||||||
Aerospace Structures | 23,867 | (210,938 | ) | 57,898 | (132,458 | ) | ||||||||||
Precision Components | 2,942 | 24,106 | 7,223 | 74,468 | ||||||||||||
Product Support | 14,662 | 12,402 | 42,986 | 31,514 | ||||||||||||
Corporate | (37,901 | ) | (4,141 | ) | (81,107 | ) | (35,839 | ) | ||||||||
$ | 55,166 | $ | (126,250 | ) | $ | 172,379 | $ | 91,663 | ||||||||
Operating Margin % | ||||||||||||||||
Integrated Systems | 20.1 | % | 19.2 | % | 19.2 | % | 19.4 | % | ||||||||
Aerospace Structures | 7.8 | % | (60.9 | )% | 6.1 | % | (11.8 | )% | ||||||||
Precision Components | 1.3 | % | 9.6 | % | 1.0 | % | 9.5 | % | ||||||||
Product Support | 16.8 | % | 15.9 | % | 16.7 | % | 13.9 | % | ||||||||
Consolidated | 6.5 | % | (13.8 | )% | 6.6 | % | 3.2 | % | ||||||||
Depreciation and Amortization: | ||||||||||||||||
Integrated Systems | $ | 9,766 | $ | 10,659 | $ | 30,228 | $ | 31,316 | ||||||||
Aerospace Structures | 17,942 | 245,266 | 54,289 | 276,845 | ||||||||||||
Precision Components | 13,999 | 11,407 | 42,344 | 39,600 | ||||||||||||
Product Support | 2,294 | 2,462 | 7,230 | 7,352 | ||||||||||||
Corporate | 330 | 434 | 989 | 1,224 | ||||||||||||
$ | 44,331 | $ | 270,228 | $ | 135,080 | $ | 356,337 | |||||||||
Amortization of Acquired Contract Liabilities: | ||||||||||||||||
Integrated Systems | $ | (7,628 | ) | $ | (9,804 | ) | $ | (27,101 | ) | $ | (30,316 | ) | ||||
Aerospace Structures | (21,105 | ) | (23,831 | ) | (60,190 | ) | (67,039 | ) | ||||||||
Precision Components | (473 | ) | (790 | ) | (1,740 | ) | (2,573 | ) | ||||||||
$ | (29,206 | ) | $ | (34,425 | ) | $ | (89,031 | ) | $ | (99,928 | ) | |||||
Capital Expenditures: | ||||||||||||||||
Integrated Systems | $ | 2,763 | $ | 10,444 | $ | 8,586 | $ | 20,309 | ||||||||
Aerospace Structures | 2,228 | 8,028 | 9,820 | 23,494 | ||||||||||||
Precision Components | 2,636 | 5,853 | 11,040 | 16,979 | ||||||||||||
Product Support | 687 | 714 | 2,020 | 2,047 | ||||||||||||
Corporate | 843 | 196 | 1,657 | 534 | ||||||||||||
$ | 9,157 | $ | 25,235 | $ | 33,123 | $ | 63,363 | |||||||||
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(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures
We prepare and publicly release quarterly unaudited financial statements prepared in accordance with GAAP. In accordance with Securities and Exchange Commission (the "SEC") guidance on Compliance and Disclosure Interpretations, we also disclose and discuss certain non-GAAP financial measures in our public releases. Currently, the non-GAAP financial measure that we disclose is Adjusted EBITDA, which is our net income before interest, income taxes, amortization of acquired contract liabilities, curtailments, settlements and early retirement incentives, legal settlements, depreciation and amortization. We disclose Adjusted EBITDA on a consolidated and an operating segment basis in our earnings releases, investor conference calls and filings with the SEC. The non-GAAP financial measures that we use may not be comparable to similarly titled measures reported by other companies. Also, in the future, we may disclose different non-GAAP financial measures in order to help our investors more meaningfully evaluate and compare our future results of operations to our previously reported results of operations.
We view Adjusted EBITDA as an operating performance measure and, as such, we believe that the GAAP financial measure most directly comparable to it is net income. In calculating Adjusted EBITDA, we exclude from net income the financial items that we believe should be separately identified to provide additional analysis of the financial components of the day-to-day operation of our business. We have outlined below the type and scope of these exclusions and the material limitations on the use of these non-GAAP financial measures as a result of these exclusions. Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as a measure of liquidity, as an alternative to net income (loss), income from continuing operations, or as an indicator of any other measure of performance derived in accordance with GAAP. Investors and potential investors in our securities should not rely on Adjusted EBITDA as a substitute for any GAAP financial measure, including net income (loss) or income from continuing operations. In addition, we urge investors and potential investors in our securities to carefully review the reconciliation of Adjusted EBITDA to net income set forth below, in our earnings releases and in other filings with the SEC and to carefully review the GAAP financial information included as part of our Quarterly Reports on Form 10-Q and our Annual Reports on Form 10-K that are filed with the SEC, as well as our quarterly earnings releases, and compare the GAAP financial information with our Adjusted EBITDA.
Adjusted EBITDA is used by management to internally measure our operating and management performance and by investors as a supplemental financial measure to evaluate the performance of our business that, when viewed with our GAAP results and the accompanying reconciliation, we believe provides additional information that is useful to gain an understanding of the factors and trends affecting our business. We have spent more than 20 years expanding our product and service capabilities partially through acquisitions of complementary businesses. Due to the expansion of our operations, which included acquisitions, our net income has included significant charges for depreciation and amortization. Adjusted EBITDA excludes these charges and provides meaningful information about the operating performance of our business, apart from charges for depreciation and amortization. We believe the disclosure of Adjusted EBITDA helps investors meaningfully evaluate and compare our performance from quarter to quarter and from year to year. We also believe Adjusted EBITDA is a measure of our ongoing operating performance because the isolation of non-cash income and expenses, such as amortization of acquired contract liabilities, depreciation and amortization, and non-operating items, such as interest and income taxes, provides additional information about our cost structure, and, over time, helps track our operating progress. In addition, investors, securities analysts and others have regularly relied on Adjusted EBITDA to provide a financial measure by which to compare our operating performance against that of other companies in our industry.
Set forth below are descriptions of the financial items that have been excluded from our net income to calculate Adjusted EBITDA and the material limitations associated with using this non-GAAP financial measure as compared to net income:
• | Divestitures may be useful for investors to consider because they reflect gains or losses from sale of operating units. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations. |
• | Legal settlements may be useful to investors to consider because they reflect gains or losses from disputes with third parties. We do not believe that these gains or losses necessarily reflect the current and ongoing cash earnings related to our operations. |
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(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
• | Curtailments, settlements and early retirement incentives may be useful to investors to consider because it represents the current period impact of the change in defined benefit obligation due to the reduction in future service costs. We do not believe these charges (gains) necessarily reflect the current and ongoing cash earnings related to our operations. |
• | Amortization of acquired contract liabilities may be useful for investors to consider because it represents the non-cash earnings on the fair value of below market contracts acquired through acquisitions. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations. |
• | Amortization expenses (including impairments) may be useful for investors to consider because it represents the estimated attrition of our acquired customer base and the diminishing value of product rights and licenses. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure. |
• | Depreciation may be useful for investors to consider because they generally represent the wear and tear on our property and equipment used in our operations. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure. |
• | The amount of interest expense and other we incur may be useful for investors to consider and may result in current cash inflows or outflows. However, we do not consider the amount of interest expense and other to be a representative component of the day-to-day operating performance of our business. |
• | Income tax expense may be useful for investors to consider because it generally represents the taxes which may be payable for the period and the change in deferred income taxes during the period and may reduce the amount of funds otherwise available for use in our business. However, we do not consider the amount of income tax expense to be a representative component of the day-to-day operating performance of our business. |
Management compensates for the above-described limitations of using non-GAAP measures by using a non-GAAP measure only to supplement our GAAP results and to provide additional information that is useful to gain an understanding of the factors and trends affecting our business.
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(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
The following table shows our Adjusted EBITDA reconciled to our net income for the indicated periods (in thousands):
Three Months Ended | Nine Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA): | ||||||||||||||||
Net Income (loss) | $ | 29,332 | $ | (88,649 | ) | $ | 83,872 | $ | 35,695 | |||||||
Add-back: | ||||||||||||||||
Income tax expense | 6,136 | (53,393 | ) | 32,786 | 6,429 | |||||||||||
Interest expense and other | 19,698 | 15,792 | 55,721 | 49,539 | ||||||||||||
Curtailment charge | — | — | — | 2,863 | ||||||||||||
Loss on divestiture and assets held for sale | 14,350 | — | 19,124 | — | ||||||||||||
Legal settlement charges | — | 12,400 | — | 12,400 | ||||||||||||
Amortization of acquired contract liabilities | (29,206 | ) | (34,425 | ) | (89,031 | ) | (99,928 | ) | ||||||||
Depreciation and amortization | 44,331 | 270,228 | 135,080 | 356,337 | ||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 84,641 | $ | 121,953 | $ | 237,552 | $ | 363,335 | ||||||||
Net Sales # | $ | 844,863 | $ | 913,866 | $ | 2,612,885 | $ | 2,828,278 | ||||||||
Adjusted EBITDA Margin # | 10.4% | 13.9% | 9.4% | 13.3% | ||||||||||||
# Net Sales includes Amortization of Acquired Contract Liabilities. Since Adjusted EBITDA excludes Amortization of Acquired | ||||||||||||||||
Contract Liabilities, we've also excluded it from Net Sales in arriving at Adjusted EBITDA margin throughout this document. | ||||||||||||||||
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(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Three Months Ended December 31, 2016 | |||||||||||||||||||||||||
Segment Data | |||||||||||||||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | Total | Integrated Systems | Aerospace Structures | Precision Components | Product Support | Corporate/Eliminations | |||||||||||||||||||
Net Income | $ | 29,332 | |||||||||||||||||||||||
Add-back: | |||||||||||||||||||||||||
Income tax expense | 6,136 | ||||||||||||||||||||||||
Interest expense and other | 19,698 | ||||||||||||||||||||||||
Operating Income (Loss) | $ | 55,166 | $ | 51,596 | $ | 23,867 | $ | 2,942 | $ | 14,662 | $ | (37,901 | ) | ||||||||||||
Loss on assets held for sale | 14,350 | — | — | — | — | 14,350 | |||||||||||||||||||
Amortization of acquired contract liabilities | (29,206 | ) | (7,628 | ) | (21,105 | ) | (473 | ) | — | — | |||||||||||||||
Depreciation and amortization | 44,331 | 9,766 | 17,942 | 13,999 | 2,294 | 330 | |||||||||||||||||||
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 84,641 | $ | 53,734 | $ | 20,704 | $ | 16,468 | $ | 16,956 | $ | (23,221 | ) | ||||||||||||
Net Sales | $ | 844,863 | $ | 256,080 | $ | 304,235 | $ | 226,294 | $ | 87,292 | $ | (29,038 | ) | ||||||||||||
Adjusted EBITDA Margin | 10.4% | 21.6% | 7.3% | 7.3% | 19.4% | n/a | |||||||||||||||||||
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(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Nine Months Ended December 31, 2016 | |||||||||||||||||||||||||
Segment Data | |||||||||||||||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | Total | Integrated Systems | Aerospace Structures | Precision Components | Product Support | Corporate/Eliminations | |||||||||||||||||||
Net Income | $ | 83,872 | |||||||||||||||||||||||
Add-back: | |||||||||||||||||||||||||
Income tax expense | 32,786 | ||||||||||||||||||||||||
Interest expense and other | 55,721 | ||||||||||||||||||||||||
Operating Income (Loss) | $ | 172,379 | $ | 145,379 | $ | 57,898 | $ | 7,223 | $ | 42,986 | $ | (81,107 | ) | ||||||||||||
Loss on divestiture and assets held for sale | 19,124 | — | — | — | — | 19,124 | |||||||||||||||||||
Amortization of acquired contract liabilities | (89,031 | ) | (27,101 | ) | (60,190 | ) | (1,740 | ) | — | — | |||||||||||||||
Depreciation and amortization | 135,080 | 30,228 | 54,289 | 42,344 | 7,230 | 989 | |||||||||||||||||||
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 237,552 | $ | 148,506 | $ | 51,997 | $ | 47,827 | $ | 50,216 | $ | (60,994 | ) | ||||||||||||
Net Sales | $ | 2,612,885 | $ | 758,803 | $ | 956,114 | $ | 740,354 | $ | 257,317 | $ | (99,703 | ) | ||||||||||||
Adjusted EBITDA Margin | 9.4% | 20.3% | 5.8% | 6.5% | 19.5% | n/a | |||||||||||||||||||
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(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Three Months Ended December 31, 2015 | |||||||||||||||||||||||||
Segment Data | |||||||||||||||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | Total | Integrated Systems | Aerospace Structures | Precision Components | Product Support | Corporate / Eliminations | |||||||||||||||||||
Net Loss | $ | (88,649 | ) | ||||||||||||||||||||||
Add-back: | |||||||||||||||||||||||||
Income tax expense | (53,393 | ) | |||||||||||||||||||||||
Interest expense and other | 15,792 | ||||||||||||||||||||||||
Operating (Loss) Income | $ | (126,250 | ) | $ | 52,321 | $ | (210,938 | ) | $ | 24,106 | $ | 12,402 | (4,141 | ) | |||||||||||
Legal settlement charges | 12,400 | — | 10,500 | — | 1,900 | — | |||||||||||||||||||
Amortization of acquired contract liabilities | (34,425 | ) | (9,804 | ) | (23,831 | ) | (790 | ) | — | — | |||||||||||||||
Depreciation and amortization | 270,228 | 10,659 | 245,266 | 11,407 | 2,462 | 434 | |||||||||||||||||||
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 121,953 | $ | 53,176 | $ | 20,997 | $ | 34,723 | $ | 16,764 | $ | (3,707 | ) | ||||||||||||
Net Sales | $ | 913,866 | $ | 271,849 | $ | 346,639 | $ | 250,284 | $ | 78,127 | $ | (33,033 | ) | ||||||||||||
Adjusted EBITDA Margin | 13.9% | 20.3% | 6.5% | 13.9% | 21.5% | n/a | |||||||||||||||||||
13
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Nine Months Ended December 31, 2015 | |||||||||||||||||||||||||
Segment Data | |||||||||||||||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | Total | Integrated Systems | Aerospace Structures | Precision Components | Product Support | Corporate / Eliminations | |||||||||||||||||||
Net Income | $ | 35,695 | |||||||||||||||||||||||
Add-back: | |||||||||||||||||||||||||
Income tax expense | 6,429 | ||||||||||||||||||||||||
Interest expense and other | 49,539 | ||||||||||||||||||||||||
Operating Income (Loss) | $ | 91,663 | $ | 153,978 | $ | (132,458 | ) | $ | 74,468 | $ | 31,514 | (35,839 | ) | ||||||||||||
Curtailment charge | 2,863 | — | — | — | — | 2,863 | |||||||||||||||||||
Legal settlement charges | 12,400 | — | 10,500 | — | 1,900 | — | |||||||||||||||||||
Amortization of acquired contract liabilities | (99,928 | ) | (30,316 | ) | (67,039 | ) | (2,573 | ) | — | — | |||||||||||||||
Depreciation and amortization | 356,337 | 31,316 | 276,845 | 39,600 | 7,352 | 1,224 | |||||||||||||||||||
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 363,335 | $ | 154,978 | $ | 87,848 | $ | 111,495 | $ | 40,766 | $ | (31,752 | ) | ||||||||||||
Net Sales | $ | 2,828,278 | $ | 791,901 | $ | 1,127,230 | $ | 781,250 | $ | 226,649 | $ | (98,752 | ) | ||||||||||||
Adjusted EBITDA Margin | 13.3% | 20.3% | 8.3% | 14.3% | 18.0% | n/a | |||||||||||||||||||
14
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except per share data)
Non-GAAP Financial Measure Disclosures (continued)
Adjusted income from continuing operations, before income taxes, adjusted income from continuing operations and adjusted income from continuing operations per diluted share, before non-recurring costs has been provided for consistency and comparability. These measures should not be considered in isolation or as alternatives to income from continuing operations before income taxes, income from continuing operations and income from continuing operations per diluted share presented in accordance with GAAP. The following tables reconcile income from continuing operations before income taxes, income from continuing operations, and income from continuing operations per diluted share, before non-recurring costs
Three Months Ended | ||||||||||||
December 31, 2016 | ||||||||||||
Pre-Tax | After-Tax | Diluted EPS | ||||||||||
Income from Continuing Operations - GAAP | $ | 35,468 | $ | 29,332 | $ | 0.59 | ||||||
Transformation Related Costs: | ||||||||||||
Loss on assets held for sale | 14,350 | 10,476 | 0.21 | |||||||||
Restructuring costs (non-cash) | 3,065 | 2,237 | 0.05 | |||||||||
Restructuring costs (cash) | 11,067 | 8,079 | 0.16 | |||||||||
Adjusted Income from Continuing Operations - non-GAAP | $ | 63,950 | $ | 50,124 | $ | 1.01 | ||||||
Nine Months Ended | ||||||||||||
December 31, 2016 | ||||||||||||
Pre-Tax | After-Tax | Diluted EPS | ||||||||||
Income from Continuing Operations - GAAP | $ | 116,658 | $ | 83,872 | $ | 1.70 | ||||||
Adjustments: | ||||||||||||
Triumph Precision Components - Strike related costs | 15,701 | 11,462 | 0.23 | |||||||||
Triumph Precision Components - Inventory write-down | 6,089 | 4,445 | 0.09 | |||||||||
Triumph Aerospace Structures - UAS program | 14,200 | 10,366 | 0.21 | |||||||||
Loss on divestiture and assets held for sale | 19,124 | 15,250 | 0.31 | |||||||||
Restructuring cost (non-cash) | 10,296 | 7,516 | 0.15 | |||||||||
Restructuring costs (cash) | 28,180 | 20,571 | 0.42 | |||||||||
Adjusted Income from Continuing Operations - non-GAAP | $ | 210,248 | $ | 153,482 | $ | 3.11 | ||||||
15
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except per share data)
Non-GAAP Financial Measure Disclosures (continued)
Three Months Ended | ||||||||||||
December 31, 2015 | ||||||||||||
Pre-Tax | After-Tax | Diluted EPS | ||||||||||
Loss from Continuing Operations - GAAP | $ | (142,042 | ) | $ | (88,649 | ) | $ | (1.80 | ) | |||
Adjustments: | ||||||||||||
Legal settlement charges | 12,400 | 8,531 | 0.17 | |||||||||
Tradename impairment | 229,200 | 148,751 | 3.02 | |||||||||
Adjusted Income from Continuing Operations - non-GAAP | $ | 99,558 | $ | 68,633 | $ | 1.39 | ||||||
Nine Months Ended | |||||||||||||
December 31, 2015 | |||||||||||||
Pre-Tax | After-Tax | Diluted EPS | |||||||||||
Income from Continuing Operations - GAAP | $ | 42,124 | $ | 35,695 | $ | 0.72 | |||||||
Adjustments: | |||||||||||||
Legal settlement charges | 12,400 | 8,531 | 0.17 | ||||||||||
Tradename impairment | 229,200 | 148,751 | 3.02 | ||||||||||
Facility consolidation costs | 5,360 | 3,688 | 0.07 | ||||||||||
Curtailment charge | 2,863 | 1,970 | 0.04 | ||||||||||
Adjusted Income from Continuing Operations - non-GAAP | $ | 291,947 | $ | 198,635 | $ | 4.03 | * | ||||||
* Difference due to rounding. | |||||||||||||
16
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
The following table reconciles our Operating income to Adjusted Operating income as noted above.
Three Months Ended | Three Months Ended | |||||||
December 31, 2016 | December 31, 2015 | |||||||
Operating income (loss) - GAAP | $ | 55,166 | (126,250 | ) | ||||
Adjustments: | ||||||||
Loss on assets held for sale | 14,350 | — | ||||||
Tradename impairment | — | 229,200 | ||||||
Legal settlement charges | — | 12,400 | ||||||
Restructuring costs (non- cash) | 3,065 | — | ||||||
Restructuring costs (cash) | 11,067 | — | ||||||
Adjusted Operating Income - non-GAAP | $ | 83,648 | $ | 115,350 | ||||
17
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Cash provided by operations has been provided for consistency and comparability. We also use free cash flow available for debt reduction as a key factor in planning for and consideration of strategic acquisitions and the repayment of debt. This measure should not be considered in isolation, as a measure of residual cash flow available for discretionary purposes, or as an alternative to operating results presented in accordance with GAAP. The following table reconciles cash provided by operations to free cash flow available for debt reduction.
Three Months Ended | Nine Months Ended | |||||||
December 31, | December 31, | |||||||
2016 | 2016 | |||||||
Cash flow from operations | $ | (41,415 | ) | $ | (172,651 | ) | ||
Less: | ||||||||
Capital expenditures | (9,157 | ) | (33,123 | ) | ||||
Sale of assets | 13,141 | 23,185 | ||||||
Free cash flow available for debt reduction, acquisitions and share repurchases | $ | (37,431 | ) | $ | (182,589 | ) | ||
We use "Net Debt to Capital" as a measure of financial leverage. The following table sets forth the computation of Net Debt to Capital:
December 31, | March 31, | |||||||
2016 | 2016 | |||||||
Calculation of Net Debt | ||||||||
Current portion | $ | 187,731 | $ | 42,441 | ||||
Long-term debt | 1,470,649 | 1,374,879 | ||||||
Total debt | 1,658,380 | 1,417,320 | ||||||
Plus: Deferred debt issuance costs | 12,493 | 8,971 | ||||||
Less: Cash | (35,461 | ) | (20,984 | ) | ||||
Net debt | $ | 1,635,412 | $ | 1,405,307 | ||||
Calculation of Capital | ||||||||
Net debt | $ | 1,635,412 | $ | 1,405,307 | ||||
Stockholders' equity | 980,816 | 934,944 | ||||||
Total capital | $ | 2,616,228 | $ | 2,340,251 | ||||
Percent of net debt to capital | 62.5 | % | 60.0 | % | ||||
18