Triumph Group Reports Strong First Quarter Fiscal 2013 Earnings; Raises Fiscal Year 2013 Guidance

BERWYN, Pa.—(BUSINESS WIRE)—Triumph Group, Inc. (NYSE: TGI) today reported that net sales for the first quarter of fiscal year ending March 31, 2013 totaled $887.7 million, a five percent increase from last year’s first quarter net sales of $845.1 million. Organic sales growth for the quarter was five percent.

Income from continuing operations for the first quarter of fiscal year 2013 was $76.3 million, or $1.46 per diluted share, versus $50.9 million, or $0.99 per diluted share, for the first quarter of the prior fiscal year. The quarter’s results included approximately $0.5 million pre-tax ($0.3 million after tax or $0.01 per diluted share) of integration costs related to the acquisition of Vought Aircraft Industries (now Triumph Aerostructures- Vought Aircraft Division). In addition, the first quarter results included a charge of $1.2 million pre-tax ($0.7 million after tax or $0.01 per diluted share) for early retirement incentives offered to certain Triumph Aerostructures employees. The prior fiscal year’s quarter included $0.5 million pre-tax ($0.3 million after tax) of integration costs associated with the Vought acquisition. Excluding integration costs and the early retirement incentives, income from continuing operations for the quarter was $77.4 million, or $1.48 per diluted share.

Income tax expense for the quarter included approximately $2.2 million of additional tax, or $0.04 per diluted share, due to the recapture of domestic production deductions taken in earlier years associated with a refund claim expected to be filed in the second quarter. The number of shares used in computing earnings per share for the first quarter of fiscal year 2013 was 52.3 million shares. During the quarter, the company generated $127.6 million of cash flow from operations before Triumph Aerostructures’ pension contribution of $25.1 million; after this contribution, cash flow from operations was $102.5 million.

Segment Results

Aerostructures

The Aerostructures segment reported net sales for the quarter of $669.9 million, compared to $643.3 million in the prior year period, an increase of four percent, all of which was organic. Operating income for the first quarter of fiscal year 2013 was $120.1 million compared to $88.0 million for the prior year period, an increase of thirty-seven percent, and included a net unfavorable cumulative catch-up adjustment on long-term contracts of $1.3 million offset by a favorable $7.0 million settlement of a termination claim. As a result of improved execution, synergy realization, lower pension expense and the favorable termination claim, the segment’s operating margin for the quarter was eighteen percent.

Aerospace Systems

The Aerospace Systems segment reported net sales for the quarter of $140.5 million, compared to $133.0 million in the prior year period, an increase of six percent, all of which was organic. Operating income for the first quarter of fiscal year 2013 was $23.5 million compared to $22.4 million for the prior year period, an increase of five percent. Operating margin for the quarter was seventeen percent. The segment’s operating results included $1.7 million of legal expenses associated with the previously reported trade secret litigation.

Aftermarket Services

The Aftermarket Services segment reported net sales for the quarter of $80.0 million, compared to $70.4 million in the prior year period, an increase of fourteen percent. Organic sales growth for the quarter was nine percent. Operating income for the first quarter of fiscal year 2013 was $11.8 million compared to $7.0 million for the prior year period, an increase of seventy percent. Operating margin for the quarter was fifteen percent, a 490 basis points improvement over the prior year and a 160 basis points improvement sequentially.

Outlook

Commenting on the company’s performance and its outlook for fiscal year 2013, Jeffry D. Frisby, Triumph’s President and Chief Executive Officer, said, “Triumph had a strong start to the year highlighted by increased revenues, significant operating income growth and year-over-year operating margin expansion. We generated record cash flow during the quarter and strengthened our balance sheet by reducing our debt as well as increasing the size and extending the term of our revolving credit facility. Our backlog is strong and, on balance, our end markets remain favorable. These key elements position us well to capitalize on new opportunities and to deliver value to our customers and shareholders.”

“Given our performance in the quarter and based on current production rates and a weighted average share count of 52.5 million shares, we are reaffirming our revenue guidance for fiscal year 2013 of $3.5 to $3.7 billion and are raising our full year earnings guidance to earnings per share from continuing operations of approximately $5.65 per diluted share, excluding integration costs and early retirement incentives.”

As previously announced, Triumph Group will hold a conference call tomorrow at 8:30 a.m. (ET) to discuss the fiscal year 2013 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 27th until August 3rd by calling (888) 266-2081 (Domestic) or (703) 925-2533 (International), passcode #1584666.

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.