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

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

  • Net sales for second quarter fiscal year 2013 increased 19% to $938.2 million

  • Operating income for second quarter fiscal year 2013 increased 32% to $142.9, reflecting an operating margin of 15%

  • Income from continuing operations for second quarter fiscal year 2013 was $80.2 million, or $1.53 per diluted share, which included integration costs of $1.4 million pre-tax ($0.02 per diluted share) 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 37% to $1.57 per diluted share

  • Year-to-date cash flow from operations before pension contributions of $56.0 million was $188.9 million

BERWYN, Pa.--(BUSINESS WIRE)-- Triumph Group, Inc. (NYSE:TGI) today reported that net sales for the second quarter of fiscal year ending March 31, 2013 totaled $938.2 million, a nineteen percent increase from last year's second quarter net sales of $790.5 million. Substantially all of the sales growth for the quarter was organic.

Income from continuing operations for the second quarter of fiscal year 2013 was $80.2 million, or $1.53 per diluted share, versus $58.6 million, or $1.13 per diluted share, for the second quarter of the prior fiscal year. The quarter's results included approximately $1.4 million pre-tax ($0.9 million after tax or $0.02 per diluted share) of integration expenses related to the acquisition of Vought Aircraft Industries (now Triumph Aerostructures-Vought Aircraft Division). In addition, the second quarter results included a charge of $2.0 million pre-tax ($1.2 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 $1.1 million pre-tax ($0.7 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 $82.3 million, or $1.57 per diluted share.


The number of shares used in computing diluted earnings per share for the second quarter of fiscal year 2013 was 52.3 million shares.

Net sales for the first six months of fiscal year 2013 were $1.826 billion, a twelve percent increase from net sales of $1.636 billion last fiscal year. Income from continuing operations for the first six months of fiscal year 2013 increased forty-three percent to $156.5 million, or $2.99 per diluted share, versus $109.5 million, or $2.13 per diluted share, in the prior year period. The year to date results included $2.0 million pre-tax ($1.3 million after tax or $0.02 per diluted share) of integration expenses related to the Vought acquisition and charges of $3.1 million pre-tax ($2.0 million after tax or $0.04 per diluted share) for early retirement incentives. The prior fiscal year period included $1.6 million pre-tax ($1.0 million after tax) of integration expenses associated with the Vought acquisition. Excluding these costs, income from continuing operations for the first six months of fiscal year 2013 was $159.8 million, or $3.06 per diluted share.

During the six months ended September 30, 2012, the company generated $188.9 million of cash flow from operations before Triumph Aerostructures' pension contribution of $56.0 million; after this contribution, cash flow from operations was $132.9 million.

Segment Results

Aerostructures

The Aerostructures segment reported net sales for the quarter of $714.0 million compared to $588.0 million in the prior year period, an increase of twenty-one percent, all of which was organic. Operating income for the second quarter of fiscal year 2013 was $121.4 million compared to $92.5 million for the prior year period, an increase of thirty-one percent and included a net unfavorable cumulative catch-up adjustment on long-term contracts of $0.2 million. The segment's operating margin for the quarter was seventeen percent, a 130 basis points improvement over the prior year period. The segment's operating results included $1.4 million of integration costs, the majority of which related to severance costs.

Aerospace Systems

The Aerospace Systems segment reported net sales for the quarter of $150.1 million, compared to $133.8 million in the prior year period, an increase of twelve percent, all of which was organic. Operating income for the second quarter of fiscal year 2013 was $25.7 million compared to $22.6 million for the prior year period, an increase of fourteen percent. Operating margin for the quarter was seventeen percent. The segment's operating results included $1.2 million of expense associated with the GECI Aviation (Sky Aircraft) bankruptcy and $1.0 million, compared to $0.5 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 $76.1 million, compared to $70.5 million in the prior year period, an increase of eight percent. Organic sales growth for the quarter was four percent. Operating income for the second quarter of fiscal year 2013 was $10.8 million compared to $7.0 million for the prior year period, an increase of fifty-four percent. Operating margin for the quarter was fourteen percent, a 430 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, "The second quarter was another great quarter for Triumph highlighted by increased revenue, record operating income and year over year margin expansion. Our backlog, which represents an ideal mix of programs across our end markets, is very strong and is testimony to our diverse product offering and our operating model.

"Based on the strong year-to-date performance, 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 $5.95 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 second 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 October 31st until November 7th by calling (888) 266-2081 (Domestic) or (703) 925-2533 (International), passcode #1593689.

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 Ended

Six Months Ended

September 30,

September 30,

CONDENSED STATEMENTS OF INCOME

2012

2011

2012

2011

Net sales

$

938,181

$

790,528

$

1,825,869

$

1,635,591

Operating income, before acquisition and integration

costs and early retirement incentives

146,336

109,600

288,973

215,440

Acquisition and integration costs

1,432

1,144

1,977

1,604

Early retirement incentives expense

1,957

-

3,107

-

Operating income

142,947

108,456

283,889

213,836

Interest expense and other

16,668

17,671

33,900

44,133

Income tax expense

46,088

32,221

93,466

60,235

Income from continuing operations

80,191

58,564

156,523

109,468

Loss from discontinued operations, net of tax

-

(76

)

-

(765

)

Net income

$

80,191

$

58,488

$

156,523

$

108,703

Earnings per share - basic:

Income from continuing operations

$

1.61

$

1.20

$

3.16

$

2.25

Loss from discontinued operations

-

(0.00

)

-

(0.02

)

Net income

$

1.61

$

1.20

$

3.16

$

2.24

*

Weighted average common shares outstanding - basic

49,657

48,697

49,536

48,582

Earnings per share - diluted:

Income from continuing operations

$

1.53

$

1.13

$

2.99

$

2.13

Loss from discontinued operations

-

(0.00

)

-

(0.01

)

Net income

$

1.53

$

1.13

$

2.99

$

2.11

*

Weighted average common shares outstanding - diluted

52,289

51,646

52,280

51,478

Dividends declared and paid per common share

$

0.04

$

0.04

$

0.08

$

0.06

*Difference due to rounding.

FINANCIAL DATA (UNAUDITED)

TRIUMPH GROUP, INC. AND SUBSIDIARIES

(dollars in thousands, except per share data)

BALANCE SHEET

Unaudited

Audited

September 30,

March 31,

2012

2012

Assets

Cash and cash equivalents

$

30,651

$

29,662

Accounts receivable, net

397,262

440,608

Inventory, net of unliquidated progress payments of $138,940 and $164,450

891,353

817,956

Rotable assets

35,730

34,554

Deferred income taxes

51,448

72,259

Prepaid and other current assets

23,313

23,344

Current assets

1,429,757

1,418,383

Property and equipment, net

744,748

733,380

Goodwill

1,546,259

1,546,374

Intangible assets, net

812,481

829,676

Other, net

57,848

26,944

Total assets

$

4,591,093

$

4,554,757

Liabilities & Stockholders' Equity

Current portion of long-term debt

$

125,201

$

142,237

Accounts payable

281,089

266,124

Accrued expenses

231,813

311,620

Current liabilities

638,103

719,981

Long-term debt, less current portion

967,489

1,016,625

Accrued pension and post-retirement benefits, noncurrent

626,162

700,125

Deferred income taxes, noncurrent

283,366

188,370

Other noncurrent liabilities

124,844

136,287

Stockholders' Equity:

Common stock, $.001 par value, 100,000,000 shares

authorized, 50,078,428 and 49,590,273 shares issued

50

50

Capital in excess of par value

840,750

833,935

Treasury stock, at cost, 75,994 and 58,533 shares

(3,168

)

(1,716

)

Accumulated other comprehensive loss

(9,317

)

(9,306

)

Retained earnings

1,122,814

970,406

Total stockholders' equity

1,951,129

1,793,369

Total liabilities and stockholders' equity

$

4,591,093

$

4,554,757

FINANCIAL DATA (UNAUDITED)

TRIUMPH GROUP, INC. AND SUBSIDIARIES

(dollars in thousands)

SEGMENT DATA

Three Months Ended

Six Months Ended

September 30,

September 30,

2012

2011

2012