Triumph Group (TGI) Tops Q3 EPS by 1c, Revenues Miss; Reaffirms FY19 EPS/Revenue Guidance

Triumph Group (NYSE: TGI) reported Q3 EPS of $0.42, $0.01 better than the analyst estimate of $0.41. Revenue for the quarter came in at $807.9 million versus the consensus estimate of $830.32 million.

Net sales were $807.9 million.
Operating loss was ($16.9) million. On an adjusted basis, operating income was $37.6 million.
Net loss was ($30.9) million, or ($0.62) per share. On an adjusted basis, net income was $21.1 million, or $0.42 per diluted share.
Cash flow from operations was $4.1 million, and free cash use was ($6.5) million.
Management reaffirms guidance for fiscal year 2019 net sales, EPS and cash usage.

“Triumph continues to make strides towards the financial targets and strategic goals we’ve laid out for our fiscal 2019,” stated Daniel J. Crowley, Triumph’s president and chief executive officer. “Similar to the first two quarters of the fiscal year, during the third quarter we generated year-over-year organic sales growth as we ramped up production on several narrow-body and development programs. Additionally, on an adjusted basis, all three segments delivered sequential improvement in operating margins, reflecting the benefits of our ongoing cost optimization initiatives.”

Mr. Crowley continued, “Our cash usage trend remains on track with our previously stated guidance. We generated positive operating cash flow in the third quarter, and reduced our free cash use dramatically, both sequentially and year-over-year. We remain highly confident in our ability to deliver positive free cash flow for the fourth quarter of fiscal 2019. Looking ahead to 2020 and beyond, our recently announced portfolio actions enhance line of sight into our prospects for sustained positive free cash flow, and present us opportunities to improve our liquidity position.”

Mr. Crowley concluded, “We continue to reshape our portfolio, reducing our contract manufacturing structures work as evidenced by the divestitures of our Fabrication and Machining operations in our Aerospace Structures business, which represent approximately $310 million combined in sales over the trailing twelve-month period. These transactions further our strategic shift towards our higher margin Integrated Systems and Product Support businesses. By becoming a smaller and more focused company, we believe we are on the path to unlocking the full potential of our most attractive business lines. Enhanced cash flow will enable us to deploy resources towards the pursuit of profitable growth and increased value for shareholders.”

Outlook

• Based on anticipated aircraft production rates and excluding the impacts of pending divestitures, the Company continues to expect that net sales for fiscal year 2019 will be approximately $3.3 to $3.4 billion, up from fiscal 2018 as development programs enter production, and sales from continuing programs along with new wins offset waning programs.
• The Company expects fiscal year 2019 earnings per share to be ($1.55) to ($2.10), or $1.50 to $2.10 per diluted share, adjusted for pension accounting changes, certain forward loss charges (reductions), transformation related costs and loss on completed divestitures.
• The Company expects fiscal year 2019 cash used in operations of ($150.0) to ($190.0) million, and free cash flow use of ($200.0) to ($250.0) million.
• The Company’s current outlook reflects adjustments detailed in the attached tables but excludes the impact of any potential future divestitures.

GUIDANCE:

Triumph Group sees FY2019 EPS of $1.50-$2.10, versus the consensus of $1.74. Triumph Group sees FY2019 revenue of $3.3-3.4 billion, versus the consensus of $3.38 billion.

For earnings history and earnings-related data on Triumph Group (TGI) click here.

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