Triumph Group Reports First Quarter Fiscal 2014 Earnings

BERWYN, PA. — Triumph Group, Inc. (NYSE: TGI) today reported that net sales for the first quarter of fiscal year ending March 31, 2014 totaled $943.7 million, a six percent increase from last year’s first quarter net sales of $887.7 million. Organic sales for the quarter decreased two percent primarily due to a decline in non-recurring revenue.

Net income for the first quarter of fiscal year 2014 was $79.0 million, or $1.50 per diluted share, versus $76.3 million, or $1.46 per diluted share, for the first quarter of the prior fiscal year, an increase of four percent. The quarter’s results included approximately $3.6 million pre-tax ($2.3 million after tax or $0.04 per diluted share) of costs related to the Jefferson Street facility move. The prior fiscal year’s quarter included approximately $0.5 million ($0.3 million after tax) of integration costs associated with the acquisition of Vought Aircraft Industries (now Triumph Aerostructures-Vought Aircraft Division) and a charge of $1.2 million pre-tax ($0.7 million after tax) for early retirement incentives. Excluding the Jefferson Street move related costs, net income for the quarter was $81.4 million, or $1.54 per diluted share. Also included in the quarter’s results was approximately $1.3 million pre-tax ($0.8 million after tax or $0.02 per diluted share) of acquisition related costs primarily attributable to the Primus Composite acquisition. The number of shares used in computing diluted earnings per share for the quarter was 52.8 million shares.

During the quarter, the company generated $37.6 million of cash flow from operations before Triumph Aerostructures’ pension contribution of $25.8 million; after this contribution, cash flow from operations was $11.8 million. This amount reflects our planned investment in growth programs and the establishment of the Red Oak facility, which will enhance the company’s future profitability.

Segment Results

Aerostructures

The Aerostructures segment reported net sales for the quarter of $651.9 million, compared to $669.9 million in the prior year period. Organic sales for the quarter declined four percent primarily due to a $20.7 million decline in non-recurring revenue. Operating income for the first quarter of fiscal year 2014 was $100.4 million, compared to $120.1 million for the prior year period, and included a net unfavorable cumulative catch-up adjustment on long-term contracts of $4.7 million, of which $1.7 million was related to the Jefferson Street facility move. The prior fiscal year’s quarter included a favorable $7.0 million settlement of a termination claim. The segment’s operating margin for the quarter was fifteen percent. The segment’s operating results for the quarter included charges of $3.5 million related to the Jefferson Street facility move, which remains on budget and on time.

Aerospace Systems

The Aerospace Systems segment reported net sales for the quarter of $219.5 million, compared to $140.5 million in the prior year period, an increase of fifty-six percent, reflecting the impact of the Triumph Processing-Embee Division and Triumph Engine Control Systems acquisitions in fiscal year 2013. Organic sales growth for the quarter was six percent. Operating income for the first quarter of fiscal year 2014 was $42.6 million compared to $23.5 million for the prior year period, an increase of eighty-two percent. Operating margin for the quarter was nineteen percent. The segment’s operating results included $2.9 million, compared to $1.7 million in the prior year period, of legal expenses associated with the previously reported trade secret litigation.

Aftermarket Services

The Aftermarket Services segment reported net sales for the quarter of $74.4 million, compared to $80.0 million in the prior year period. The year over year decrease in net sales reflected the impact of the divestitures of the Instrument Companies. Organic sales growth for the quarter was one percent. Operating income for the first quarter of fiscal year 2014 was $11.3 million compared to $11.8 million for the prior year period. Operating margin for the quarter was fifteen percent. The segment’s operating results for the quarter included a residual loss on the sale of the assets of the Instruments Companies of $0.2 million.

Outlook

Commenting on the company’s performance and its outlook for fiscal year 2014, Jeffry D. Frisby, Triumph’s President and Chief Executive Officer, said, “Triumph delivered a solid first quarter of performance to begin this fiscal year. During the quarter, our same store backlog grew both sequentially and year over year as we continued to execute well and reduce costs. We successfully completed the acquisition of Primus Composites, which increased our global presence, expanded our structural composite capability and diversified our customer base. In addition, we expanded our relationship with Embraer by securing the recently announced award to design and build fuselage sections and other components for the second generation E-jet family.”

“Based on current projected aircraft production rates and a weighted average share count of 53.1 million shares, we are reaffirming our revenue guidance for fiscal year 2014 of $3.8 to $4.0 billion and are maintaining our full year guidance of earnings per share of $5.65 to $5.75 per diluted share. Excluding the Jefferson Street move related costs, earnings per share for fiscal year 2014 are expected to be $6.30 to $6.40 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 2014 first 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 July 26th to August 7th by calling (888) 266-2081 (Domestic) or (703) 925-2533 (International), passcode #1618421.

Triumph Group, Inc. headquartered in Berwyn, Pennsylvania, designs, engineers, manufactures, repairs and overhauls a broad portfolio of aerostructures, aircraft 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.