Triumph Group Reports Net Sales of $426.0 Million in Third Quarter Fiscal 2021

Triumph Group Inc

BERWYN, PA — Triumph Group, Inc. (NYSE: TGI) recently reported financial results for its third quarter of fiscal year 2021, which ended December 31, 2020.

Third Quarter Fiscal 2021

  • Net sales of $426.0 million
  • Operating loss of $35.0 million with operating margin of (8%); adjusted operating income of $38.1 million with adjusted operating margin of 9%
  • Net loss of $68.1 million, or ($1.30) per share; adjusted net income of $4.9 million, or $0.09 per diluted share
  • Cash flow provided by operations of $43.9 million; free cash flow of $37.7 million

Full-Year Fiscal 2021 Net Sales Guidance

  • Net sales between $1.8 – $1.9 billion

“Revenues in Systems & Support increased for the second consecutive quarter driven by higher military volumes and partial rate recovery on Airbus programs. Organic revenue decreased compared to the prior year period due primarily to expected declines in Aerospace Structures associated with planned reductions from our portfolio transformation and the ongoing COVID-19 pandemic,” stated Daniel J. Crowley, Triumph’s chairman, president and chief executive officer.  “We continued executing our plan to exit legacy programs in Aerospace Structures with only the 747-8 remaining to close out later this calendar year.  Revenue from our Systems business now exceeds Structures sales volume.”

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Mr. Crowley continued, “Our cash generation in the third quarter demonstrated strong working capital management, the benefits of robust cost reduction actions and lower expenses on 747-8 close-out.  Profitability on an adjusted basis improved sequentially in the quarter, demonstrating measurable recovery towards pre-COVID levels across both business units. Triumph remains focused on protecting the health and safety of our people, conserving cash and partnering with our customers to ensure we are best positioned for recovery for the benefit of all our stakeholders.”

Third Quarter Fiscal Year 2021 Overview

After accounting for the impact of the divestitures, sales for the third quarter of fiscal 2021 were down 32% organically from the comparable prior year period.  The decline was driven by planned reductions on sunsetting and transitioned programs, impacts of the COVID-19 pandemic and resulting production rate decreases primarily on commercial programs, partially offset by increases in military programs.

Third quarter operating loss of $35.0 million included $45.3 million loss on held for sale assets, $23.7 million impairment of rotable inventory driven legacy aircraft retirements and $4.1 million of restructuring costs associated with facility closures.  Net loss for the third quarter of fiscal year 2021 was $68.1 million, or ($1.30) per share.  On an adjusted basis, net income was $5.0 million, or $0.09 per share.

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Triumph’s results included the following:

 ($ millions except EPS)

Pre-tax

After-tax

EPS

Loss from Continuing Operations – GAAP

$

(67.4)

$

(68.1)

$

(1.30)

Loss on sale of assets and businesses (non-cash)

45.3

45.3

0.86

Impairment of rotable inventory (non-cash)

23.7

23.7

0.45

Restructuring costs (cash)

4.1

4.1

0.08

Adjusted Income from Continuing Operations – non-GAAP *

$

5.7

$

5.0

$

0.09

* Differences due to rounding

The number of shares used in computing diluted earnings per share for the third quarter of 2021 was 52.8 million.

Backlog, which represents the next 24 months of actual purchase orders with firm delivery dates or contract requirements, was $2.28 billion, down as expected compared to the prior year period and on a sequential basis due to divestitures, sunsetting programs and recent production rate reductions, but partially offset by military program increases in Systems & Support.

For the third quarter of fiscal 2021, cash flow provided by operations was $43.9 million, reflecting improved working capital and operating margins and included liquidation of approximately $10.0 million in prior period advances against current period deliveries.

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Outlook

Based on anticipated aircraft production rates and MRO demand, including the impacts of pending program exits and no extended shut-down of operations due to the pandemic, the Company continues to expect that net sales for fiscal year 2021 will be approximately $1.8 to $1.9 billion.

The Company expects cash flow to be break even to positive in the fourth quarter of the fiscal year.  Therefore, the Company expects cash used in operations and free cash use for the full fiscal year to be on par or moderately lower than the first nine months.

The Company stated their outlook excludes the impact of the pending sale of their Composite businesses and any potential future divestitures.

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