Triumph Group Reports Fourth Quarter Fiscal 2019 Results
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 | |||||||||||||
authorized, 52,460,920 and 52,460,920 shares issued | 52 | 51 | |||||||||||
Capital in excess of par value | 867,545 | 851,280 | |||||||||||
Treasury stock, at cost, 2,612,847 and 2,791,072 shares | (159,154) | (179,082) | |||||||||||
Accumulated other comprehensive loss | (487,683) | (367,870) | |||||||||||
(Accumulated deficit) Retained earnings | (794,072) | 146,155 | |||||||||||
Total stockholders' (deficit) equity | (573,312) | 450,534 | |||||||||||
Total liabilities and stockholders' (deficit) equity | $ 2,873,925 | $ 3,807,064 | |||||||||||
FINANCIAL DATA (UNAUDITED) | |||||||||||||
TRIUMPH GROUP, INC. AND SUBSIDIARIES | |||||||||||||
(dollars in thousands) | |||||||||||||
CASH FLOWS | Twelve Months Ended | ||||||||||||
March 31, | |||||||||||||
2019 | 2018 | ||||||||||||
Operating Activities | |||||||||||||
Net loss | $ (321,767) | $ (425,391) | |||||||||||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||||||||||||
Depreciation & amortization | 149,904 | 158,368 | |||||||||||
Impairment of intangible assets | - | 535,227 | |||||||||||
Amortization of acquired contract liabilities | (67,314) | (125,148) | |||||||||||
Loss on divestitures & assets held for sale | 235,301 | 30,741 | |||||||||||
Curtailment and settlement gain, net | 4,165 | (25,722) | |||||||||||
Other amortization included in interest expense | 8,770 | 11,677 | |||||||||||
Recovery of doubtful accounts receivable | (495) | (242) | |||||||||||
Provision (benefit) for deferred income taxes | (9,192) | (43,108) | |||||||||||
Employee stock compensation | 10,291 | 7,949 | |||||||||||
Changes in assets & liabilities, excluding the effects of acquisitions/divestitures | |||||||||||||
Trade and other receivables | (109,078) | (99,620) | |||||||||||
Contract assets | 91,795 | (5,484) | |||||||||||
Inventories | (49,134) | (163,417) | |||||||||||
Prepaid expenses and other current assets | (3,144) | (4,239) | |||||||||||
Accounts payable, accrued expenses and contract liabilities | (44,564) | (43,696) | |||||||||||
Accrued pension and other postretirement benefits | (80,044) | (88,464) | |||||||||||
Other | 10,181 | (8,325) | |||||||||||
Net cash used in operating activities | (174,325) | (288,894) | |||||||||||
Investing Activities | |||||||||||||
Capital expenditures | (47,099) | (42,050) | |||||||||||
Proceeds from sale of assets | 247,647 | 83,082 | |||||||||||
Acquisitions, net of cash acquired | - | (2,818) | |||||||||||
Net cash provided by investing activities | 200,548 | 38,214 | |||||||||||
Financing Activities | |||||||||||||
Net increase in revolving credit facility | 102,113 | 82,888 | |||||||||||
Proceeds from issuance of long-term debt and capital leases | 54,600 | 544,243 | |||||||||||
Repayment of debt and capital lease obligations | (113,425) | (387,373) | |||||||||||
Payment of deferred financing costs | (1,982) | (17,729) | |||||||||||
Dividends paid | (8,066) | (7,943) | |||||||||||
Repurchase of restricted shares for minimum tax obligation | (860) | (483) | |||||||||||
Net cash provided by financing activities | 32,380 | 213,603 | |||||||||||
Effect of exchange rate changes on cash | (1,615) | 3,263 | |||||||||||
Net change in cash | 56,988 | (33,814) | |||||||||||
Cash and equivalents at beginning of period | 35,819 | 69,633 | |||||||||||
Cash and equivalents at end of period | $ 92,807 | $ 35,819 | |||||||||||
FINANCIAL DATA (UNAUDITED) | |||||||||||||
TRIUMPH GROUP, INC. AND SUBSIDIARIES | |||||||||||||
(dollars in thousands) | |||||||||||||
SEGMENT DATA | Three Months Ended | Twelve Months Ended | |||||||||||
March 31, | March 31, | ||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||
Net sales: | |||||||||||||
Integrated Systems | $ 288,754 | $ 275,252 | $ 1,042,947 | $ 986,351 | |||||||||
Aerospace Structures | 511,314 | 550,371 | 2,062,404 | 1,954,729 | |||||||||
Product Support | 73,883 | 79,075 | 283,743 | 281,913 | |||||||||
Elimination of inter-segment sales | (4,924) | (7,838) | (24,164) | (24,042) | |||||||||
$ 869,027 | $ 896,860 | $ 3,364,930 | $ 3,198,951 | ||||||||||
Operating (loss) income: | |||||||||||||
Integrated Systems | $ 42,394 | $ 54,562 | $ 157,615 | $ 185,401 | |||||||||
Aerospace Structures | (264) | (343,469) | (152,407) | (568,164) | |||||||||
Product Support | 12,876 | 13,633 | 43,479 | 45,702 | |||||||||
Corporate | (244,203) | (35,163) | (323,366) | (128,579) | |||||||||
$ (189,197) | $ (310,437) | $ (274,679) | $ (465,640) | ||||||||||
Operating Margin % | |||||||||||||
Integrated Systems | 14.7% | 19.8% | 15.1% | 18.8% | |||||||||
Aerospace Structures | -0.1% | -62.4% | -7.4% | -29.1% | |||||||||
Product Support | 17.4% | 17.2% | 15.3% | 16.2% | |||||||||
Consolidated | -21.8% | -34.6% | -8.2% | -14.6% | |||||||||
Depreciation and amortization: | |||||||||||||
Integrated Systems | $ 6,736 | $ 8,128 | $ 29,052 | $ 35,986 | |||||||||
Aerospace Structures | 26,543 | 373,444 | 111,431 | 649,013 | |||||||||
Product Support | 1,377 | 1,675 | 6,321 | 6,744 | |||||||||
Corporate | 900 | 801 | 3,100 | 1,852 | |||||||||
$ 35,556 | $ 384,048 | $ 149,904 | $ 693,595 | ||||||||||
Amortization of acquired contract liabilities: | |||||||||||||
Integrated Systems | $ (8,332) | $ (10,058) | $ (34,121) | $ (38,293) | |||||||||
Aerospace Structures | (10,212) | (23,228) | (33,193) | (86,855) | |||||||||
$ (18,544) | $ (33,286) | $ (67,314) | $ (125,148) | ||||||||||
Capital expenditures: | |||||||||||||
Integrated Systems | $ 3,022 | $ 223 | $ 12,410 | $ 6,146 | |||||||||
Aerospace Structures | 7,645 | 7,453 | 30,581 | 29,519 | |||||||||
Product Support | 1,453 | 577 | 3,324 | 2,206 | |||||||||
Corporate | 156 | 1,865 | 784 | 4,179 | |||||||||
$ 12,276 | $ 10,118 | $ 47,099 | $ 42,050 | ||||||||||
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 c ontract 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 15 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 earnings necessarily reflect the current and ongoing cash earnings related to our operations.
- 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 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.
FINANCIAL DATA (UNAUDITED) | |||||||||||||
TRIUMPH GROUP, INC. AND SUBSIDIARIES | |||||||||||||
(dollars in thousands) | |||||||||||||
Non-GAAP Financial Measure Disclosures (continued) | |||||||||||||
• | 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. | |||||||||||||
The following table shows our Adjusted EBITDA reconciled to our net income for the indicated periods (in thousands): | |||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||
March 31, | March 31, | ||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | |||||||||||||
Net Loss | $ (199,612) | $ (304,830) | $ (321,767) | $ (425,391) | |||||||||
Add-back: | |||||||||||||
Income Tax (Benefit) Expense | (8,165) | (2,343) | (5,426) | (36,457) | |||||||||
Interest Expense and Other | 31,104 | 27,213 | 114,619 | 99,442 | |||||||||
Curtailment & settlement (gain)/loss, net | 4,165 | (11,146) | 4,165 | (25,722) | |||||||||
Loss on divestitures | 217,464 | 10,370 | 235,301 | 30,741 | |||||||||
Adoption of ASU 2017-07 | - | - | 87,241 | - | |||||||||
Amortization of Acquired Contract Liabilities | (18,544) | (33,286) | (67,314) | (125,148) | |||||||||
Depreciation and Amortization | 35,556 | 384,048 | 149,904 | 693,595 | |||||||||
Adjusted Earnings before Interest, Taxes, | |||||||||||||
Depreciation and Amortization ("Adjusted EBITDA") | $ 61,968 | $ 70,026 | $ 196,723 | $ 211,060 | |||||||||
Non-service defined benefit income (excluding settlements) | (16,689) |
(19,331) |
(66,270) |
(77,512) | |||||||||
Adjusted Earnings before Interest, Taxes, | |||||||||||||
Depreciation and Amortization, and Pension ("Adjusted EBITDAP") |
$ 45,279 | $ 50,695 | $ 130,453 | $ 133,548 | |||||||||
Net Sales | $ 869,027 | $ 896,860 | $ 3,364,930 | $ 3,198,951 | |||||||||
Net Loss Margin | -23.0% | -34.0% | -9.6% | -13.3% | |||||||||
Adjusted EBITDAP Margin | 5.3% | 5.9% | 4.0% | 4.3% | |||||||||
FINANCIAL DATA (UNAUDITED) | |||||||||||||
TRIUMPH GROUP, INC. AND SUBSIDIARIES | |||||||||||||
(dollars in thousands) | |||||||||||||
Non-GAAP Financial Measure Disclosures (continued) | |||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation, Amortization and Pension (EBITDAP): | Three Months Ended March 31, 2019 | ||||||||||||
Segment Data | |||||||||||||
Total | Integrated Systems | Aerospace Structures | Product Support | Corporate / Eliminations | |||||||||
Net Loss | $ (199,612) | ||||||||||||
Add-back: | |||||||||||||
Non-service defined benefit income | (12,524) | ||||||||||||
Income Tax Benefit | (8,165) | ||||||||||||
Interest Expense and Other | 31,104 | ||||||||||||
Operating (Loss) Income | $ (189,197) | $ 42,394 | $ (264) | $ 12,876 | $ (244,203) | ||||||||
Loss on divestitures | 217,464 | - | - | - | 217,464 | ||||||||
Amortization of Acquired Contract Liabilities | (18,544) | (8,332) | (10,212) | - | - | ||||||||
Depreciation and Amortization | 35,556 | 6,736 | 26,543 | 1,377 | 900 | ||||||||
Adjusted Earnings (Losses) before Interest, Taxes, | |||||||||||||
Depreciation and Amortization, Pension ("Adjusted EBITDAP") | $ 45,279 | $ 40,798 | $ 16,067 | $ 14,253 | $ (25,839) | ||||||||
Net Sales | $ 869,027 | $ 288,754 | $ 511,314 | $ 73,883 | $ (4,924) | ||||||||
Adjusted EBITDAP Margin | 5.3% | 14.5% | 3.2% | 19.3% | n/a | ||||||||
Adjusted Earnings before Interest, Taxes, Depreciation, Amortization, and Pension (EBITDAP): | Twelve Months Ended March 31, 2019 | ||||||||||||
Segment Data | |||||||||||||
Total | Integrated Systems | Aerospace Structures | Product Support | Corporate / Eliminations | |||||||||
Net Loss | $ (321,767) | ||||||||||||
Add-back: | |||||||||||||
Non-service defined benefit income | (62,105) | ||||||||||||
Income Tax Expense | (5,426) | ||||||||||||
Interest Expense and Other | 114,619 | ||||||||||||
Operating (Loss) Income | $ (274,679) | $ 157,615 | $ (152,407) | $ 43,479 | $ (323,366) | ||||||||
Loss on divestitures | 235,301 | - | - | - | 235,301 | ||||||||
Adoption of ASU 2017-07 | 87,241 | - | 87,241 | - | - | ||||||||
Amortization of Acquired Contract Liabilities | (67,314) | (34,121) | (33,193) | - | - | ||||||||
Depreciation and Amortization | 149,904 | 29,052 | 111,431 | 6,321 | 3,100 | ||||||||
Adjusted Earnings (Losses) before Interest, Taxes, | |||||||||||||
Depreciation and Amortization, Pension ("Adjusted EBITDAP") | $ 130,453 | $ 152,546 | $ 13,072 | $ 49,800 | $ (84,965) | ||||||||
Net Sales | $ 3,364,930 | $ 1,042,947 | $ 2,062,404 | $ 283,743 | $ (24,164) | ||||||||
Adjusted EBITDAP Margin | 4.0% | 15.1% | 0.6% | 17.6% | n/a | ||||||||
FINANCIAL DATA (UNAUDITED) | |||||||||||||
TRIUMPH GROUP, INC. AND SUBSIDIARIES | |||||||||||||
(dollars in thousands) | |||||||||||||
Non-GAAP Financial Measure Disclosures (continued) | |||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation, Amortization and Pension (EBITDAP): | Three Months Ended March 31, 2018 | ||||||||||||
Segment Data | |||||||||||||
Total | Integrated Systems | Aerospace Structures | Product Support | Corporate / Eliminations | |||||||||
Net Loss | $ (304,830) | ||||||||||||
Add-back: | |||||||||||||
Non-service defined benefit income | (30,477) | ||||||||||||
Income Tax Benefit | (2,343) | ||||||||||||
Interest Expense and Other | 27,213 | ||||||||||||
Operating (Loss) Income | $ (310,437) | $ 54,562 | $ (343,469) | $ 13,633 | $ (35,163) | ||||||||
Loss on divestitures | 10,370 | - | - | - | 10,370 | ||||||||
Amortization of Acquired Contract Liabilities | (33,286) | (10,058) | (23,228) | - | - | ||||||||
Depreciation and Amortization | 384,048 | 8,128 | 373,444 | 1,675 | 801 | ||||||||
Adjusted Earnings (Losses) before Interest, Taxes, | |||||||||||||
Depreciation and Amortization ("Adjusted EBITDAP") | $ 50,695 | $ 52,632 | $ 6,747 | $ 15,308 | $ (23,992) | ||||||||
Net Sales | $ 896,860 | $ 275,252 | $ 550,371 | $ 79,075 | $ (7,838) | ||||||||
Adjusted EBITDAP Margin | 5.9% | 19.8% | 1.3% | 19.4% |
n/a | ||||||||
Adjusted Earnings before Interest, Taxes, Depreciation, Amortization and Pension (EBITDAP): | Twelve Months Ended March 31, 2018 | ||||||||||||
Segment Data | |||||||||||||
Total | Integrated Systems | Aerospace Structures | Product Support | Corporate / Eliminations | |||||||||
Net Loss | $ (425,391) | ||||||||||||
Add-back: | |||||||||||||
Non-service defined benefit income | (103,234) | ||||||||||||
Income Tax Benefit | (36,457) | ||||||||||||
Interest Expense and Other | 99,442 | ||||||||||||
Operating Income (Loss) | $ (465,640) | $ 185,401 | $ (568,164) | $ 45,702 | $ (128,579) | ||||||||
Loss on divestitures | 30,741 | - | - | - | 30,741 | ||||||||
Amortization of Acquired Contract Liabilities | (125,148) | (38,293) | (86,855) | - | - | ||||||||
Depreciation and Amortization | 693,595 | 35,986 | 649,013 | 6,744 | 1,852 | ||||||||
Adjusted Earnings (Losses) before Interest, Taxes, | |||||||||||||
Depreciation and Amortization, Pension ("Adjusted EBITDAP") | $ 133,548 | $ 183,094 | $ (6,006) | $ 52,446 | $ (95,986) | ||||||||
Net Sales | $ 3,198,951 | $ 986,351 | $ 1,954,729 | $ 281,913 | $ (24,042) | ||||||||
Adjusted EBITDAP Margin | 4.3% | 19.3% | -0.3% | 18.6% | n/a | ||||||||
FINANCIAL DATA (UNAUDITED) | |||||||||||||
TRIUMPH GROUP, INC. AND SUBSIDIARIES | |||||||||||||
(dollars in thousands) | |||||||||||||
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 diluted per 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 table reconciles 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 | ||||||||
March 31, 2019 | ||||||||
Pre-tax | After-tax | Diluted EPS | ||||||
Loss from Continuing Operations- GAAP | $ (207,777) | $ (199,612) | $ (4.01) | |||||
Adjustments: | ||||||||
Loss on divestitures | 217,464 | 217,464 | 4.37 | |||||
Curtailment & settlement, net | 4,165 | 4,165 | 0.08 | |||||
E2 Jet program forward loss reduction | (3,700) | (3,700) | (0.07) | |||||
G280 program forward loss charge | 26,548 | 26,548 | 0.53 | |||||
Restructuring costs | 12,892 | 12,892 | 0.26 | |||||
Adjusted Income from Continuing Operations- non-GAAP | $ 49,592 | $ 57,757 | $ 1.15 | |||||
Twelve Months Ended | ||||||||
March 31, 2019 | ||||||||
Pre-tax | After-tax | Diluted EPS | ||||||
Loss from Continuing Operations- GAAP | $ (327,193) | $ (321,767) | $ (6.47) | |||||
Adjustments: | ||||||||
Adoption of ASU 2017-07 | 87,241 | 87,241 | 1.76 | |||||
Loss on divestitures | 235,301 | 235,301 | 4.73 | |||||
Curtailment & settlement, net | 4,165 | 4,165 | 0.08 | |||||
Global 7500 forward loss charge | 60,424 | 60,424 | 1.21 | |||||
E2 Jet program forward loss charge | 5,462 | 5,462 | 0.11 | |||||
G280 program forward loss charge | 29,064 | 29,064 | 0.58 | |||||
Reduction of prior Gulfstream forward loss | (7,624) | (7,624) | (0.15) | |||||
Restructuring costs | 31,098 | 31,098 | 0.62 | |||||
Refinancing costs | 1,281 | 1,281 | 0.03 | |||||
Adjusted Income from Continuing Operations- non-GAAP | $ 119,219 | $ 124,645 | $ 2.49 | |||||
FINANCIAL DATA (UNAUDITED) | |||||||||||||
TRIUMPH GROUP, INC. AND SUBSIDIARIES | |||||||||||||
(dollars in thousands) | |||||||||||||
Non-GAAP Financial Measure Disclosures (continued) | |||||||||||||
Three Months Ended | |||||||||||||
March 31, 2018 | |||||||||||||
Pre-tax | After-tax | Diluted EPS | |||||||||||
Loss from Continuing Operations- GAAP | $ (307,173) | $ (304,830) | $ (6.16) | ||||||||||
Adjustments: | |||||||||||||
Goodwill Impairment | 345,000 | 341,970 | 6.91 | ||||||||||
Loss on divestitures | 10,370 | 10,370 | 0.21 | ||||||||||
Curtailment & settlement, net | (11,146) | (8,694) | (0.17) | ||||||||||
Restructuring costs (non-cash) | 467 | 364 | 0.01 | ||||||||||
Restructuring costs (cash) | 6,319 | 4,929 | 0.10 | ||||||||||
Adjusted Income from Continuing Operations- non-GAAP | $ 43,837 | $ 44,109 | $ 0.89 | * | |||||||||
Twelve Months Ended | |||||||||||||
March 31, 2018 | |||||||||||||
Pre-tax | After-tax | Diluted EPS | |||||||||||
Loss from Continuing Operations- GAAP | $ (461,848) | $ (425,391) | $ (8.60) | ||||||||||
Adjustments: | |||||||||||||
Goodwill Impairment | 535,227 | 523,510 | 10.59 | ||||||||||
Loss on divestitures | 30,741 | 30,741 | 0.62 | ||||||||||
Curtailment & settlement, net | (25,722) | (17,491) | (0.35) | ||||||||||
Refinancing costs | 1,986 | 1,350 | 0.03 | ||||||||||
Restructuring costs (non-cash) | 3,005 | 2,043 | 0.04 | ||||||||||
Restructuring costs (cash) | 40,069 | 27,247 | 0.55 | ||||||||||
Estimated impact of Tax Reform | 0 | (22,398) | (0.45) | ||||||||||
Adjusted Income from Continuing Operations- non-GAAP | $ 123,458 | $ 119,611 | $ 2.41 | * | |||||||||
* Difference due to rounding. | |||||||||||||
Adjusted Operating Income is defined as GAAP Operating Income, less expenses/gains associated with the Company's transformation, such as restructuring expenses, gains/losses on divestitures, impairments of goodwill and other assets. Management believes that this is useful in evaluating operating performance, but this measure should not be used in isolation. The following table reconciles our Operating income to Adjusted Operating income as noted above. | |||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||
March 31, 2019 | March 31, 2018 | March 31, 2019 | March 31, 2018 | |||||||||
Operating Loss - GAAP | $ (189,197) | $ (310,437) | $ (274,679) | $ (465,640) | ||||||||
Adjustments: | ||||||||||||
Goodwill & tradename impairments | - | 345,000 | 87,241 | 535,227 | ||||||||
Restructuring costs (non-cash) | - | 467 | - | 3,005 | ||||||||
Restructuring costs (cash) | 12,892 | 6,319 | 31,098 | 40,069 | ||||||||
Loss on divestitures | 217,464 | 10,370 | 235,301 | 30,741 | ||||||||
Forward loss charges, net | 22,848 | - | 87,326 | - | ||||||||
Adjusted Operating Income-non-GAAP | $ 64,007 | $ 51,719 | $ 166,287 | $ 143,402 | ||||||||
FINANCIAL DATA (UNAUDITED) | |||||||||||||
TRIUMPH GROUP, INC. AND SUBSIDIARIES | |||||||||||||
(dollars in thousands) | |||||||||||||
Non-GAAP Financial Measure Disclosures (continued) | |||||||||||||
Cash provided by operations, is provided for consistency and comparability. We also use free cash flow 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. | |||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||
March 31, | March 31, | ||||||||||||
2019 | 2019 | 2018 | |||||||||||
Cash flow from operations | $ 18,812 | $ (174,325) | $ (288,894) | ||||||||||
Less: | |||||||||||||
Capital expenditures | (12,276) | (47,099) | (42,050) | ||||||||||
Free cash flow | $ 6,536 | $ (221,424) | $ (330,944) | ||||||||||
The Company provides cash flow guidance on non-GAAP basis adjusting capital expenditures from cash from operations to arrive at free cash flow. | |||||||||||||
The following table reconciles cash from operations on a GAAP basis to free cash flow guidance. | |||||||||||||
FY 20 Cash Flow | |||||||||||||
Guidance Range | |||||||||||||
Cash flow from operations | $50,000 - $110,000 | ||||||||||||
Less: | |||||||||||||
Capital expenditures | $50,000 - $60,000 | ||||||||||||
Free cash flow | $0 - $50,000 | ||||||||||||
We use "Net Debt to Capital" as a measure of financial leverage. The following table sets forth the computation of Net Debt to Capital: | |||||||||||||
March 31, | March 31, | ||||||||||||
2019 | 2018 | ||||||||||||
Calculation of Net Debt | |||||||||||||
Current portion | $ 8,201 | $ 16,527 | |||||||||||
Long-term debt | 1,480,620 | 1,421,757 | |||||||||||
Total debt | 1,488,821 | 1,438,284 | |||||||||||
Plus: Deferred debt issuance costs | 13,170 | 16,949 | |||||||||||
Less: Cash | (92,807) | (35,819) | |||||||||||
Net debt | $ 1,409,184 | $ 1,419,414 | |||||||||||
Calculation of Capital | |||||||||||||
Net debt | $ 1,409,184 | $ 1,419,414 | |||||||||||
Stockholders' (deficit) equity | (573,312) | 450,534 | |||||||||||
Total capital | $ 835,872 | $ 1,869,948 | |||||||||||
Percent of net debt to capital | 168.6% | 75.9% | |||||||||||
View original content:http://www.prnewswire.com/news-releases/triumph-group-reports-fourth-quarter-fiscal-2019-results-300846118.html
SOURCE Triumph Group