BERWYN, PA — Triumph Group, Inc. (NYSE: TGI) recently reported financial results for its third quarter of fiscal 2023, which ended December 31, 2022.
Third Quarter Fiscal 2023
- Net sales of $328.9 million
- Operating income of $35.0 million with operating margin of 11%; adjusted operating income of $35.7 million with adjusted operating margin of 11%
- Net income of $11.0 million, or $0.08 per diluted share; adjusted net income of $8.3 million, or $0.12 per diluted share
- Cash flow from operations was breakeven; free cash use of $5.0 million
- Proactively pursuing comprehensive de-leveraging plan to strengthen the balance sheet
Fiscal 2023 Guidance
- Raising net sales to a range of $1.30 billion to $1.35 billion, up from prior guidance of approximately $1.3 billion
- Updating GAAP earnings per diluted share to a range of $1.59 to $1.79, down from prior guidance of $1.66 to $1.86 due to additional share count from the warrant distribution
- Raising adjusted earnings per diluted share to a range of $0.48 to $0.68, up from prior guidance of $0.40 to $0.60, on increased sales volume
- Cash used in operations of ($30.0) million to ($40.0) million; free cash use of ($55.0) million to ($65.0) million, improved from prior guidance of ($60.0) million to ($70.0) million
“We are pleased to have generated 21% organic sales growth in our continuing operations during the quarter as a result of ramping commercial OEM production rates, accelerating MRO demand, and recovering military volumes,” said Dan Crowley, TRIUMPH’s chairman, president, and chief executive officer. “As our supply chain catches up to increasing customer demand, we expect to see strong cash generation next quarter. We remain on track to meet our updated cash flow guidance as we increase profitability year over year.”
Mr. Crowley continued, “While our top-line growth is encouraging, improving our capital structure remains a priority. To that end, we recently provided stockholders with a pro rata distribution of warrants as a step towards deleveraging while we prepare to refinance our 2024 debt maturities. We continue to actively explore financing options and are confident that our comprehensive approach, underscored by the strength in our business and improving markets’ conditions, will position TRIUMPH well for the future and benefit all of our stakeholders. TRIUMPH is on track to deliver profitable growth and increase shareholder value.”
Third Quarter Fiscal 2023 Overview
Excluding divestitures and exited programs, sales for the third quarter of fiscal 2023 were up 21% organically from the prior year period due to increases in commercial narrow-body production and commercial MRO and partial recovery of military rotorcraft volume.
Third quarter operating income of $35.0 million includes $0.7 million loss on sale of assets and businesses, primarily from true-up adjustments on prior divestitures. Net income for the third quarter of fiscal 2023 was $11.0 million, or $0.08 per diluted share. On an adjusted basis, net income was $8.3 million, or $0.12 per diluted share due to debt extinguishment loss of $1.4 million and warrant issuance costs of $0.9 million.
TRIUMPH’s results included the following:
|
($ millions except EPS) |
Pre-tax |
After-tax |
Diluted EPS |
|||||||||
|
Loss from Continuing Operations – GAAP |
$ |
11.4 |
$ |
11.0 |
||||||||
|
GAAP EPS Numerator Adjustments: |
||||||||||||
|
Warrant related items |
(5.7) |
(5.7) |
||||||||||
|
GAAP EPS Numerator |
$ |
5.6 |
$ |
5.3 |
$ |
0.08 |
||||||
|
Loss on sale of assets and businesses, net |
0.7 |
0.7 |
0.01 |
|||||||||
|
Debt extinguishment losses |
1.4 |
1.4 |
0.02 |
|||||||||
|
Warrant issuance costs |
0.9 |
0.9 |
0.01 |
|||||||||
|
Adjusted Income from Continuing Operations – non-GAAP * |
$ |
8.7 |
$ |
8.3 |
$ |
0.12 |
||||||
Backlog, which represents the next 24 months of actual purchase orders with firm delivery dates or contract requirements, was $1.59 billion, up 12% from fiscal year end, after adjusting for the impact of the Stuart divestiture. This increase was primarily on commercial narrow body platforms.
For the third quarter of fiscal 2023, cash flow used in operations was breakeven.
Outlook
The Company’s outlook reflects adjustments detailed in the attached tables.
The Company expects net sales for fiscal 2023 will be $1.30 billion to $1.35 billion, up from prior guidance of approximately $1.3 billion.
The Company expects GAAP fiscal 2023 earnings per diluted share of $1.59 to $1.79, down from prior guidance of $1.66 to $1.86 due to additional share count from the warrant distribution, and adjusted earnings per diluted share of $0.48 to $0.68, up from prior guidance of $0.40 to $0.60 on increased sales.
The Company expects fiscal 2023 cash used in operations of ($30.0) million to ($40.0) million and approximately $25.0 million for capital expenditures, resulting in expected free cash use of ($55.0) million to ($65.0) million, improved from prior guidance of ($60.0) million to ($70.0) million.
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