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

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Triumph Group Reports StrongThird Quarter Fiscal 2013 Earnings;Raises Fiscal Year 2013 Guidance

  • Net sales for third quarter fiscal year 2013 increased 8% to $890.6 million
  • Operating income for third quarter fiscal year 2013 increased 14% to $134.4 million, reflecting an operating margin of 15%
  • Income from continuing operations for third quarter fiscal year 2013 was $75.2 million, or $1.43 per diluted share, which included integration costs of $0.3 million pre-tax and a $2.0 million pre-tax charge ($0.02 per diluted share) for early retirement incentives offered to certain Triumph Aerostructures employees. Excluding integration costs and the early retirement incentives, earnings per share from continuing operations increased 13% to $1.46 per diluted share
  • Year-to-date cash flow from operations before pension contributions of $103.8 million was $334.4 million
  • Completed acquisition of Embee, Inc. and signed agreement to acquire business of Goodrich Pump and Engine Control Systems

BERWYN, Pa.--(BUSINESS WIRE)-- Triumph Group, Inc. (NYSE: TGI) today reported that net sales for the third quarter of fiscal year ending March 31, 2013 totaled $890.6 million, an eight percent increase from last year's third quarter net sales of $826.0 million. Substantially all of the sales growth for the quarter was organic.

Income from continuing operations for the third quarter of fiscal year 2013 was $75.2 million, or $1.43 per diluted share, versus $65.9 million, or $1.27 per diluted share, for the third quarter of the prior year. The quarter's results included approximately $0.3 million pre-tax ($0.2 million after tax) of integration costs related to the acquisition of Vought Aircraft Industries (now Triumph Aerostructures-Vought Aircraft Division). In addition, the third quarter results included a charge of $2.0 million pre-tax ($1.3 million after tax or $0.02 per diluted share) for early retirement incentives offered to certain Triumph Aerostructures employees. The prior fiscal year's quarter included $2.1 million pre-tax ($1.4 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 $76.7 million, or $1.46 per diluted share. The number of shares used in computing diluted earnings per share for the third quarter of fiscal year 2013 was 52.5 million shares.


Net sales for the first nine months of fiscal year 2013 were $2.716 billion, a ten percent increase from net sales of $2.462 billion last fiscal year. Income from continuing operations for the first nine months of fiscal year 2013 increased thirty-two percent to $231.7 million, or $4.43 per diluted share, versus $175.4 million, or $3.39 per diluted share, in the prior year period. The year-to-date results included $2.2 million pre-tax ($1.4 million after tax or $0.03 per diluted share) of integration expenses related to the Vought acquisition and charges of $5.1 million pre-tax ($3.3 million after tax or $0.06 per diluted share) for early retirement incentives. The prior fiscal year's period included $3.7 million pre-tax ($2.4 million after tax) of integration expenses associated with the Vought acquisition. Excluding these costs, income from continuing operations for the nine months of fiscal year 2013 was $236.4 million, or $4.52 per diluted share.

During the nine months ended December 31, 2013, the company generated $334.4 million of cash flow from operations before Triumph Aerostructures' pension contributions of $103.8 million; after these contributions, cash flow from operations was $230.6 million.

Segments

Aerostructures

The Aerostructures segment reported net sales for the quarter of $676.8 million compared to $626.0 million in the prior year period, an increase of eight percent, all of which was organic. Operating income for the third quarter of fiscal year 2013 was $117.5 million compared to $103.9 million for the prior year period, an increase of thirteen percent and included a net unfavorable cumulative catch-up adjustment on long-term contracts of $5.5 million. As a result of improved execution and synergy realization, the segment's operating margin for the quarter was seventeen percent.

Aerospace Systems

The Aerospace Systems segment reported net sales for the quarter of $141.1 million compared to $133.3 million in the prior year period, an increase of six percent, substantially all of which was organic. Operating income for the third quarter of fiscal year 2013 was $20.6 million compared to $18.6 million for the prior year period, an increase of ten percent. Operating margin for the quarter was fifteen percent. The segment's operating results included $0.7 million of costs associated with Hurricane Sandy and $0.9 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 $74.6 million compared to $68.6 million in the prior year period, an increase of nine percent, substantially all of which was organic. Operating income for the third quarter of fiscal year 2013 was $9.9 million compared to $6.9 million for the prior year period, an increase of forty-two percent. Operating margin for the quarter was thirteen percent, a 310 basis points improvement over the prior year.

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, "We continued our strong performance during the third quarter delivering increased revenue, operating income growth and year-over-year operating margin expansion across all three of our business segments. We continued to execute well and generate significant cash flow. Strategically, we completed the acquisition of Embee, Inc. and signed an agreement to acquire Goodrich Pump and Engine Control Systems. In addition to providing a better balance within our business, both of these acquisitions advance our technical capabilities and will significantly enhance our ability to offer additional solutions to our customers. We expect this momentum to carry on into our fourth quarter and are confident of our ability to deliver long-term growth and profitability."

"Based on the strong year-to-date performance, current production rates, and a weighted average share count of 52.5 million shares, we project sales for fiscal year 2013 to be approximately $3.65 billion and are raising our full year earnings guidance to earnings per share from continuing operations of approximately $6.05 per diluted share, which includes the benefit of the retroactive reinstatement of the research and development tax credit and excludes 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 third 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 January 31st to February 7th by calling (888) 266-2081 (Domestic) or (703) 925-2533 (International), passcode #1602339.

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.

More information about Triumph can be found on the company's website at http://www.triumphgroup.com.

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 future aerospace market conditions, aircraft production rates, financial and operational performance, revenue and earnings growth, and earnings results for fiscal 2013. 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's reports filed with the SEC, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2012.

 
FINANCIAL DATA (UNAUDITED)
        
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(in thousands, except per share data)
 
 
Three Months EndedNine Months Ended
December 31,December 31,
 
CONDENSED STATEMENTS OF INCOME2012201120122011
 
 
Net sales$890,565$825,962$2,716,434$2,461,553
 

Operating income, before integration costs and early retirement incentives

136,639119,735425,611335,175
Integration costs2502,0952,2273,699
Early retirement incentives expense 2,030 - 5,137 - 
Operating income134,359117,640418,247331,476
 
Interest expense and other16,76714,54350,66758,676
Income tax expense 42,369 37,194 135,834 97,429 
 
Income from continuing operations75,22365,903231,746175,371
Loss from discontinued operations, net of tax - - - (765)
 
Net income$75,223$65,903$231,746$174,606 
 
Earnings per share - basic:
 
Income from continuing operations$1.51$1.35$4.67$3.60
Loss from discontinued operations - - - (0.02)
Net income$1.51$1.35$4.67$3.59 *
 
Weighted average common shares outstanding - basic 49,750 48,912 49,608 48,692 
 
Earnings per share - diluted:
 
Income from continuing operations$1.43$1.27$4.43$3.39
Loss from discontinued operations - - - (0.01)
Net income$1.43$1.27$4.43$3.38 
 
Weighted average common shares outstanding - diluted 52,464 51,968 52,343 51,689 
 
Dividends declared and paid per common share$0.04$0.04$0.12$0.10 

 

* Difference due to rounding.

 

 

 

    
FINANCIAL DATA (UNAUDITED)
 
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except per share data)
 
BALANCE SHEETUnauditedAudited
December 31,March 31,
20122012
Assets
Cash and cash equivalents$33,452$29,662
Accounts receivable, net322,144440,608
Inventory, net of unliquidated progress payments of $141,283 and $164,450937,796817,956
Rotable assets35,39234,554
Deferred income taxes53,22672,377
Prepaid and other current assets 18,145  23,344 
Current assets1,400,1551,418,501
 
Property and equipment, net770,110733,380
Goodwill1,593,1201,546,138
Intangible assets, net883,127829,676
Other, net 58,208  26,944 
 
Total assets$4,704,720 $4,554,639 
 
Liabilities & Stockholders' Equity
 
Current portion of long-term debt$133,951$142,237
Accounts payable246,092266,124
Accrued expenses 236,124  311,620 
Current liabilities616,167719,981
 
Long-term debt, less current portion1,040,9541,016,625
Accrued pension and post-retirement benefits, noncurrent571,702700,125
Deferred income taxes, noncurrent327,126188,252
Other noncurrent liabilities120,685136,287
 
Stockholders' Equity:

Common stock, $.001 par value, 100,000,000 shares authorized, 50,109,935 and 49,590,273 shares issued

5050
Capital in excess of par value842,485833,935
Treasury stock, at cost, 0 and 58,533 shares0(1,716)
Accumulated other comprehensive loss(8,560)(9,306)
Retained earnings 1,194,111  970,406 
Total stockholders' equity 2,028,086  1,793,369 
 
Total liabilities and stockholders' equity$4,704,720 $4,554,639 
 

 

        
FINANCIAL DATA (UNAUDITED)
 
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
 
 
 
SEGMENT DATAThree Months EndedNine Months Ended
December 31,December 31,
 
2012201120122011
 
Net sales:
Aerostructures Read Full Story

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