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Deutschland BERWYN, Pa., May 8, 2019 /PRNewswire/ -- Triumph Group, Inc. (NYSE: TGI) ("Triumph" or the "Company") today reported financial results for its fourth quarter of fiscal year 2019, which ended March 31, 2019.
Fourth Quarter Fiscal 2019
- Net sales of $869.0 million
- Operating loss of ($189.2) million with operating margin of (22%); adjusted operating income of $64.0 million with adjusted operating margin of 7%
- Net loss of ($199.6) million, or ($4.01) per share; adjusted net income of $57.8 million, or $1.15 per diluted share
- Cash flow from operations of $18.8 million, and free cash flow was $6.5 million
Full-Year Fiscal 2019
- Net sales of $3.4 billion
- Loss per share of ($6.47); adjusted earnings per diluted share of $2.49, which includes $0.61 from changes in tax valuation allowance
- Cash used in operations was ($174.3) million and free cash use was ($221.4) million
Outlook for Fiscal 2020
- Net sales guidance of between $2.8 to $2.9 billion
- GAAP and adjusted earnings per diluted share of between $2.35 to $2.95
- Free cash flow of between $0 to $50.0 million
"Triumph Group's fourth quarter capped off a year of significant progress for our Company as we delivered on key transformation objectives, including de-risking the portfolio and meeting net sales, earnings per share and positive free cash flow targets," stated Daniel J. Crowley, Triumph's president and chief executive officer. "Our core Integrated Systems and Product Support segments achieved year-over-year organic growth for the fifth consecutive quarter and continued to generate solid operating margins. Further, our Aerospace Structures segment delivered year-over-year margin expansion, reflecting the impact of core program performance and strategic divestitures."
Mr. Crowley continued, "Losses in the quarter were primarily attributed to Path to value actions in our Structures business which included the completion of our Machining and Fabrication divestitures, the assignment of the E2 contract to ASTK and the transition of our G280 wing manufacturing activities to IAI. These recent actions, along with our prior divestitures, significant cost reductions and operational improvement initiatives substantially complete our restructuring and position Triumph for the future."
Mr. Crowley concluded, "Moving into fiscal 2020, we now have an increased level of stability across our three business units and believe there is more room to enhance profitability through lean initiatives and smart portfolio optimization. We remain focused on delivering predictable profitability, continued positive free cash flow and increased value for our stockholders."
Fourth Quarter Fiscal Year 2019 Overview
After accounting for divestitures and the impact of the adoption of ASC 606, sales for the fourth quarter of fiscal 2019 were essentially flat organically from the comparable prior year period. Increased shipments for narrow body programs such as the 737, 787 and A320, military platforms, aftermarket accessory services and development programs transitioning to production were offset by declines in business jet volumes.
Fourth quarter operating loss of ($189.2) million included a $217.5 million loss on divestitures, $12.9 million of restructuring costs, a forward loss charge of $26.5 million on the G280 program and a forward loss reduction of ($3.7) million on the E2 Jet program. Net loss for the fourth quarter of fiscal year 2019 was ($199.6) million, or ($4.01) per share. On an adjusted basis, net income was $49.6 million, or $1.15 per diluted share. Triumph's results included the following:
($ millions except EPS) | Pre-tax | After-tax | Diluted EPS | |||
Loss from Continuing Operations - GAAP | $ (207.8) | $ (199.6) | $ (4.01) | |||
Loss on divestitures | 217.5 | 217.5 | 4.37 | |||
Curtailment & settlement, net | 4.2 | 4.2 | 0.08 | |||
E2 Jet program forward loss reduction | (3.7) | (3.7) | (0.07) | |||
G280 program forward loss charge | 26.5 | 26.5 | 0.53 | |||
Transformation related costs: | ||||||
Restructuring costs (cash) | 12.9 | 12.9 | 0.26 | |||
Adjusted Income from Continuing Operations - non-GAAP *Difference due to rounding | $ 49.6 | $ 57.8 | $ 1.15* |
Net loss for fiscal year 2019 was ($321.8) million or a loss of ($6.47) per share, or $2.49 earnings per diluted share on an adjusted basis, and included the following:
($ millions except EPS) | Pre-tax | After-tax | Diluted EPS | |||
Loss from Continuing Operations - GAAP | $ (327.2) | $ (321.8) | $ (6.47) | |||
Adoption of ASU 2017-07 | 87.2 | 87.2 | 1.76 | |||
Loss on divestitures | 235.3 | 235.3 | 4.73 | |||
Curtailment & settlement, net | 4.2 | 4.2 | 0.08 | |||
Global 7500 forward loss charge | 60.4 | 60.4 | 1.21 | |||
E2 Jet program forward loss charge | 5.5 | 5.5 | 0.11 | |||
G280 program forward loss charge | 29.1 | 29.1 | 0.58 | |||
Reduction of prior Gulfstream forward loss | (7.6) | (7.6) | (0.15) | |||
Refinancing costs | 1.3 | 1.3 | 0.03 | |||
Transformation related costs: | ||||||
Restructuring costs (cash) | 31.1 | 31.1 | 0.62 | |||
Adjusted Income from Continuing Operations - non-GAAP *Difference due to rounding | $ 119.2* | $ 124.6* | $ 2.49* | |||
The number of shares used in computing diluted earnings per share for the fourth quarter and full fiscal year 2019 was 50.0 million.
Backlog was $3.8 billion, up 4% organically compared to the prior year period and flat on a sequential basis reflecting increased selectivity in pursuing new awards based on projected profitability and cash flow, growth in our Integrated Systems business and the impact of divestitures in Aerospace Structures.
For the three-months ended March 31, 2019, cash flow from operations was $18.8 million, reflecting approximately ($24.0) million of cash used on the Global 7500 program.
Outlook
Based on anticipated aircraft production rates and including the impacts of pending program transfers, the Company expects that net sales for fiscal year 2020 will be approximately $2.8 to $2.9 billion.
The Company expects fiscal year 2020 earnings per share to be $2.35 to $2.95, per diluted share.
The Company expects fiscal year 2020 cash provided from operations of $50.0 to $110.0 million, and free cash flow of $0 to $50.0 million.
The Company's current outlook reflects adjustments detailed in the attached tables but excludes the impact of any potential future divestitures.
Conference Call
Triumph Group will hold a conference call today, May 8th at 8:30 a.m. (ET) to discuss the fourth quarter fiscal year 2019 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 May 8th to May 16th by calling (855) 859-2056 (Domestic) or (404) 537-3406 (International), passcode #4465019
About Triumph Group
Triumph Group, Inc., headquartered in Berwyn, Pennsylvania, designs, engineers, manufactures, repairs and overhauls a broad portfolio of aerospace and defense systems, components and structures. 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.
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 or use, 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, 2018.
FINANCIAL DATA (UNAUDITED) ON FOLLOWING PAGES
FINANCIAL DATA (UNAUDITED) | |||||||||||||
TRIUMPH GROUP, INC. AND SUBSIDIARIES | |||||||||||||
(in thousands, except per share data) | |||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||
March 31, | March 31, | ||||||||||||
CONDENSED STATEMENTS OF INCOME | 2019 | 2018 | 2019 | 2018 | |||||||||
Net sales | $ 869,027 | $ 896,860 | $ 3,364,930 | $ 3,198,951 | |||||||||
Cost of sales (excluding depreciation shown below) | 716,958 | 730,408 | 2,924,920 | 2,607,556 | |||||||||
Selling, general & administrative expenses | 75,354 | 76,152 | 298,386 | 292,630 | |||||||||
Depreciation & amortization expense | 35,556 | 39,048 | 149,904 | 158,368 | |||||||||
Impairment of intangible assets | - | 345,000 | - | 535,227 | |||||||||
Restructuring expenses | 12,892 | 6,319 | 31,098 | 40,069 | |||||||||
Curtailment & settlements, net | - | - | - | - | |||||||||
Loss on divestitures | 217,464 | 10,370 | 235,301 | 30,741 | |||||||||
Operating loss | (189,197) | (310,437) | (274,679) | (465,640) | |||||||||
Interest expense and other | 31,104 | 27,213 | 114,619 | 99,442 | |||||||||
Non-service defined benefit income | (12,524) | (30,477) | (62,105) | (103,234) | |||||||||
Income tax (benefit) expense | (8,165) | (2,343) | (5,426) | (36,457) | |||||||||
Net loss | $ (199,612) | $ (304,830) | $ (321,767) | $ (425,391) | |||||||||
Earnings per share - basic: | |||||||||||||
Net loss | $ (4.01) | $ (6.16) | $ (6.47) | $ (8.60) | |||||||||
Weighted average common shares outstanding - basic | 49,774 | 49,488 | 49,698 | 49,442 | |||||||||
Earnings per share - diluted: | |||||||||||||
Net loss | $ (4.01) | $ (6.16) | $ (6.47) | $ (8.60) | |||||||||
Weighted average common shares outstanding - diluted | 49,774 | 49,488 | 49,698 | 49,442 | |||||||||
Dividends declared and paid per common share | $ 0.04 | $ 0.04 | $ 0.16 | $ 0.16 | |||||||||
FINANCIAL DATA (UNAUDITED) | |||||||||||||
TRIUMPH GROUP, INC. AND SUBSIDIARIES | |||||||||||||
(dollars in thousands, except per share data) | |||||||||||||
BALANCE SHEET | Unaudited | Audited | |||||||||||
March 31, | March 31, | ||||||||||||
2019 | 2018 | ||||||||||||
Assets | |||||||||||||
Cash and cash equivalents | $ 92,807 | $ 35,819 | |||||||||||
Accounts receivable, net | 392,940 | 376,612 | |||||||||||
Contract assets | 326,667 | 37,573 | |||||||||||
Inventory, net of unliquidated progress payments of $0 and $387,146 | 413,560 | 1,427,169 | |||||||||||
Prepaid and other current assets | 34,446 | 44,428 | |||||||||||
Assets held for sale | - | 1,324 | |||||||||||
Current assets | 1,260,420 | 1,922,925 | |||||||||||
Property and equipment, net | 577,895 | 726,003 | |||||||||||
Goodwill | 583,225 | 592,828 | |||||||||||
Intangible assets, net | 430,954 | 507,681 | |||||||||||
Other, net | 21,431 | 57,627 | |||||||||||
Total assets | $ 2,873,925 | $ 3,807,064 | |||||||||||
Liabilities & Stockholders' (Deficit) Equity | |||||||||||||
Current portion of long-term debt | $ 8,201 | $ 16,527 | |||||||||||
Accounts payable | 433,783 | 418,367 | |||||||||||
Contract liabilities | 313,069 | 321,191 | |||||||||||
Accrued expenses | 239,572 | 235,914 | |||||||||||
Liabilities related to assets held for sale | - | 440 | |||||||||||
Current liabilities | 994,625 | 992,439 | |||||||||||
Long-term debt, less current portion | 1,480,620 | 1,421,757 | |||||||||||
Accrued pension and post-retirement benefits, noncurrent | 540,479 | 483,887 | |||||||||||
Deferred income taxes, noncurrent | 6,964 | 16,582 | |||||||||||
Other noncurrent liabilities | 424,549 | 441,865 | |||||||||||
Stockholders' (Deficit) Equity: | |||||||||||||
Common stock, $.001 par value, 100,000,000 shares |
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