Triumph Group Reports Second Quarter Fiscal 2010 Results
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-- Net sales for second quarter fiscal 2010 were $313.1 million
-- Income from continuing operations for second quarter fiscal 2010 was
$20.7 million, or $1.25 per diluted share
-- Net income for second quarter fiscal 2010 was $19.5 million, or $1.17
per diluted share
-- Cash flow from operations for second quarter fiscal 2010 increased 25%
to $40.8 million
WAYNE, Pa.--(BUSINESS WIRE)-- Triumph Group, Inc. (NYSE: TGI) today reported that net sales for the second quarter of the fiscal year ending March 31, 2010 totaled $313.1 million, a three percent decrease from last year's second quarter net sales of $323.4 million. Income from continuing operations for the second quarter of fiscal year 2010 was $20.7 million, or $1.25 per diluted share, versus $25.1 million, or $1.51 per diluted share, for the second quarter of the prior year. Net income for the second quarter of fiscal year 2010 was $19.5 million, or $1.17 per diluted share, versus $24.0 million, or $1.44 per diluted share, for the second quarter of the prior year. The number of shares used in computing diluted earnings per share for the second quarter of fiscal year 2010 was 16.6 million shares. During the quarter, the company generated $40.8 million of cash flow from operations. The results for the quarter included $1.5 million of incremental non-cash interest expense associated with the adoption of APB 14-1, which required a change in the accounting for convertible debt interest, and approximately $1.0 million of start up costs related to the Mexican facility. Prior year period results were also restated to reflect the adoption of APB 14-1, resulting in an incremental $1.6 million of interest expense over the previously reported amount.
Net sales for the first six months of fiscal year 2010 were $629.3 million, a two percent decrease from net sales of $643.9 million last fiscal year. Income from continuing operations for the first six months of fiscal year 2010 was $42.2 million, or $2.54 per diluted share. Net income for the first six months of fiscal 2010 was $37.5 million, or $2.26 per diluted share. During the six months ended September 30, 2009, the company generated $73.3 million of cash flow from operations.
Aerospace Systems
The Aerospace Systems segment reported net sales for the quarter of $256.4 million compared to $257.6 million in the prior year period. Organic sales decreased ten percent over the prior year due to the continued decline in the business jet market, program delays particularly on the Boeing 787 aircraft and the softening of the regional jet market. Operating income for the second quarter of fiscal year 2010 was $39.1 million, compared to $46.5 million for the prior year period. Operating income for the quarter included $1.2 million of legal expenses associated with the ongoing trade secret litigation.
Aftermarket Services
The Aftermarket Services segment reported net sales for the quarter of $57.3 million compared to $66.5 million in the prior year, a decrease of fourteen percent primarily due to lower passenger and freight traffic and the continued effects of airline inventory de-stocking. Operating income for the second quarter of fiscal year 2010 was $3.5 million, compared to $2.9 million for the prior year period, a twenty percent increase. Operating performance at the Phoenix APU businesses improved to a small profit for the quarter.
Outlook
Commenting on the company's performance and its outlook, Richard C. Ill, Triumph's Chairman and Chief Executive Officer, said, "In light of current market conditions, we are pleased with our performance in our second quarter. We continue to control costs and strengthen our balance sheet with strong cash generation and working capital management. Despite the uncertain and inconsistent operating environment, we continue to see opportunities for our company to grow and improve, such as the recently announced development award on the Sikorsky CH-53K aircraft."
"Based on current projected aircraft production rates and our existing share count, we are maintaining our prior guidance that earnings per share from continuing operations for the current fiscal year will be approximately $5.00 per diluted share."
As previously announced, Triumph Group will hold a conference call tomorrow at 8:30 a.m. (ET) to discuss the fiscal year 2010 second quarter 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 October 27th until November 3rd by calling (888) 266-2081 (Domestic) or (703) 925-2533 (International), passcode #1404070.
Triumph Group, Inc., headquartered in Wayne, Pennsylvania, designs, engineers, manufactures, repairs and overhauls aircraft components and accessories. 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 http://www.triumphgroup.com.
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 expectations of future aerospace market conditions, the impact of new contracts, aircraft production rates, financial and operational performance, revenue and earnings growth, and earnings results for fiscal 2010. 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's reports filed with the SEC, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2009.
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(in thousands, except per share data)
Three Months Ended Six Months Ended
September 30, September 30,
CONDENSED STATEMENTS OF INCOME 2009 2008 2009 2008
Net sales $313,139 $323,391 $629,269 $643,947
Operating income 37,128 42,714 74,998 86,042
Interest expense and other 5,501 4,611 10,827 9,579
Gain on early extinguishment of (39 ) 0 (39 ) 0
debt
Income tax expense 10,948 13,027 21,971 26,352
Income from continuing 20,718 25,076 42,239 50,111
operations
Loss from discontinued (1,267 ) (1,093 ) (4,749 ) (2,296 )
operations, net of tax
Net income $19,451 $23,983 $37,490 $47,815
Earnings per share - basic:
Income from continuing $1.26 $1.53 $2.57 $3.06
operations
Loss from discontinued ($0.08 ) ($0.07 ) ($0.29 ) ($0.14 )
operations
Net income $1.18 $1.46 $2.28 $2.92
Weighted average common shares 16,464 16,386 16,448 16,379
outstanding - basic
Earnings per share - diluted:
Income from continuing $1.25 $1.51 $2.54 $3.02
operations
Loss from discontinued ($0.08 ) ($0.07 ) ($0.29 ) ($0.14 )
operations
Net income $1.17 $1.44 $2.26 * $2.88
Weighted average common shares 16,637 16,607 16,618 16,619
outstanding - diluted
Dividends declared and paid per $0.04 $0.04 $0.08 $0.08
common share
* Difference due to rounding.
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except per share data)
BALANCE SHEET
September 30, March 31,
2009 2009
Assets
Cash $26,973 $14,478
Accounts receivable, net 182,011 209,463
Inventory 394,089 389,348
Rotable assets 26,393 25,652
Deferred income taxes 1,628 1,727
Assets held for sale 23,436 27,695
Prepaid income taxes 2,650 4,434
Prepaid expenses and other 8,852 6,021
Current assets 666,032 678,818
Property and equipment, net 326,320 332,467
Goodwill 465,211 459,541
Intangible assets, net 101,877 108,350
Other 15,118 12,031
Total assets $1,574,558 $1,591,207
Liabilities & Stockholders' Equity
Accounts payable $89,632 $103,711
Accrued expenses 96,174 109,580
Liabilities related to assets held for sale 2,758 4,283
Current portion of long-term debt 92,504 89,085
Current liabilities 281,068 306,659
Long-term debt, less current portion 330,094 370,311
Income taxes payable, non-current 2,962 2,917
Deferred income taxes and other 126,277 121,935
Stockholders' Equity:
Common stock, $.001 par value, 100,000,000 shares 16 16
authorized, 16,824,737 and 16,763,984 shares issued
Capital in excess of par value 314,059 312,256
Treasury stock, at cost, 159,038 and 174,417 shares (8,727 ) (9,785 )
Accumulated other comprehensive loss 4,425 (2,233 )
Retained earnings 524,384 489,131
Total stockholders' equity 834,157 789,385
Total liabilities and stockholders' equity $1,574,558 $1,591,207
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
SEGMENT DATA Three Months Ended Six Months Ended
September 30, September 30,
2009 2008 2009 2008
Net sales:
Aerospace Systems $256,421 $257,569 $516,394 $515,801
Aftermarket Services 57,313 66,481 115,097 129,449
Elimination of inter-segment (595 ) (659 ) (2,222 ) (1,303 )
sales
$313,139 $323,391 $629,269 $643,947
Operating income (loss):
Aerospace Systems $39,086 $46,515 $80,931 $92,585
Aftermarket Services 3,481 2,896 5,904 6,783
Corporate (5,439 ) (6,697 ) (11,837 ) (13,326 )
$37,128 $42,714 $74,998 $86,042
Depreciation and amortization:
Aerospace Systems $10,888 $8,787 $21,590 $17,390
Aftermarket Services 3,182 3,532 6,439 7,035
Corporate 227 66 344 133
$14,297 $12,385 $28,373 $24,558
Capital expenditures:
Aerospace Systems $5,959 $8,757 $11,471 $17,911
Aftermarket Services 730 827 1,760 2,974
Corporate 283 425 814 487
$6,972 $10,009 $14,045 $21,372
FINANCIAL DATA (UNAUDITED) TRIUMPH GROUP, INC. AND SUBSIDIARIES (dollars in thousands) Non-GAAP Financial Measure Disclosures We use "Net Debt to Capital" as a measure of financial leverage. The following table sets forth the computation of Net Debt to Capital:
September 30, March 31,
2009 2009
Calculation of Net Debt
Current portion $ 92,504 $ 89,085
Long-term debt 330,094 370,311
Total debt 422,598 459,396
Less: Cash 26,973 14,478
Net debt $ 395,625 $ 444,918
Calculation of Capital
Net debt $ 395,625 $ 444,918
Stockholders' equity 834,157 789,385
Total capital $ 1,229,782 $ 1,234,303
Percent of net debt to capital 32.2% 36.0%
Source: Triumph Group, Inc.
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