Triumph Group Reports Third Quarter Fiscal 2021 Results
BERWYN, Pa., Feb. 3, 2021 /PRNewswire/ -- Triumph Group, Inc. (NYSE: TGI) ("Triumph" or the "Company") today 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."
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 $0.09 per share.
Triumph's results included the following:
($ 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.
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's outlook excludes the impact of the pending sale of our Composite businesses and any potential future divestitures.
Conference Call
Triumph will hold a conference call today, February 3rd, at 8:30 a.m. (ET) to discuss the third quarter of fiscal year 2021 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, and the presentation has been posted on the Company's website at http://ir.triumphgroup.com/QuarterlyResults. An audio replay will be available from February 3rd to February 10th by calling (855) 859-2056 (Domestic) or (404) 537-3406 (International), passcode #5669003.
About Triumph
Triumph Group, Inc., headquartered in Berwyn, Pennsylvania, designs, engineers, manufactures, repairs and overhauls a broad portfolio of aerospace and defense systems, components and structures. The company serves the global aviation industry, including original equipment manufacturers and the full spectrum of military and commercial aircraft operators.
More information about Triumph can be found on the Company's website at www.triumphgroup.com.
Forward Looking Statements
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 financial and operational performance, revenues, earnings per share, cash flow or use, cost savings and operational efficiencies and organizational restructurings. 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 Group's reports filed with the SEC, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2020.
Widespread health developments, including the recent global coronavirus (COVID-19), and the responses thereto (such as voluntary and in some cases, mandatory quarantines as well as shut downs and other restrictions on travel and commercial, social and other activities) could adversely and materially affect, among other things, the economic and financial markets and labor resources of the countries in which we operate, our manufacturing and supply chain operations, commercial operations and sales force, administrative personnel, third-party service providers, business partners and customers and the demand for our products, which could result in a material adverse effect on our business, financial conditions and results of operations.
FINANCIAL DATA (UNAUDITED) ON FOLLOWING PAGES
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(in thousands, except per share data)
Three Months Ended Nine Months Ended
December 31,
December 31,
CONDENSED STATEMENTS OF OPERATIONS 2020 2019 (1) 2020 2019 (1)
---
Net sales $
425,994 $
704,666 $
1,402,886 $
2,207,007
Cost of sales (excluding depreciation shown below) 340,753 546,282 1,116,668 1,750,751
Selling, general & administrative 48,747 65,974 162,189 194,512
Depreciation & amortization 22,119 29,843 72,819 104,112
Impairment of long-lived assets 252,382
Restructuring costs 4,071 4,744 32,747 13,490
Legal judgment gain, net of expenses (3,857) (9,257)
Loss on sale of assets and businesses, net 45,273 60,019 46,020 55,190
---
Operating (loss) income (34,969) 1,661 (279,939) 98,209
Interest expense and other, net 44,881 33,178 132,344 96,069
Non-service defined benefit income (12,432) (14,799) (37,275) (56,025)
Income tax expense 698 (3,512) 2,383 12,213
---
Net (loss) income $
(68,116) $
(13,206) $
(377,391) $
45,952
===
(Loss) earnings per share - basic:
Net (loss) income $
(1.30) $
(0.26) $
(7.24) $
0.92
===
Weighted average common shares outstanding - basic 52,488 50,395 52,126 50,074
===
(Loss) earnings per share - diluted:
Net (loss) income $
(1.30) $
(0.26) $
(7.24) $
0.91
===
Weighted average common shares outstanding - diluted 52,488 50,395 52,126 50,591
===
Dividends declared and paid per common share
$ $
0.04
$ $
0.12
===
(1) As adjusted
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except share data)
BALANCE SHEETS Unaudited Audited
December 31, March 31,
2020 2020 (1)
---
Assets
Cash and cash equivalents $
477,276 $
485,463
Accounts receivable, net 167,694 359,487
Contract assets 158,289 244,417
Inventory, net 446,208 452,976
Assets held for sale 71,177
Prepaid and other current assets 17,857 19,289
---
Current assets 1,338,501 1,561,632
Property and equipment, net 356,107 418,141
Goodwill 521,416 513,527
Intangible assets, net 113,040 381,968
Other, net 72,858 105,065
---
Total assets $
2,401,922 $
2,980,333
===
Liabilities & Stockholders' Deficit
Current portion of long-term debt $
6,090 $
7,336
Accounts payable 195,300 457,694
Contract liabilities 167,772 295,320
Accrued expenses 224,367 227,403
Liabilities related to assets held for sale 45,826
---
Current liabilities 639,355 987,753
Long-term debt, less current portion 2,013,255 1,800,171
Accrued pension and post-retirement benefits, noncurrent 570,609 660,065
Deferred income taxes, noncurrent 8,028 7,439
Other noncurrent liabilities 240,505 306,169
Stockholders' Deficit:
Common stock, $.001 par value, 100,000,000 shares authorized, 55,309,922 55 52
and 52,460,920 shares issued
Capital in excess of par value 835,193 804,830
Treasury stock, at cost, 334,863 and 602,831 shares (18,037) (36,217)
Accumulated other comprehensive loss (706,169) (746,448)
Accumulated deficit (1,180,872) (803,481)
---
Total stockholders' deficit (1,069,830) (781,264)
---
Total liabilities and stockholders' deficit $
2,401,922 $
2,980,333
===
(1) As adjusted
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except share data)
Nine Months Ended December 31,
2020 2019
Operating Activities
Net (loss) income $
(377,391) $
45,952
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities:
Depreciation and amortization 72,819 104,112
Impairment of long-lived assets 252,382
Amortization of acquired contract liability (35,017) (56,153)
Loss on sale of assets and businesses 46,020 55,190
Curtailments and special termination benefits gain, net (14,373)
Other amortization included in interest expense 21,912 9,114
Provision for credit losses 4,890 632
Provision for deferred income taxes 8,108
Share-based compensation 9,086 8,245
Changes in other assets and liabilities, excluding the effects of
acquisitions and divestitures:
Trade and other receivables 169,744 72,278
Contract assets 55,170 53,047
Inventories (2,152) (67,764)
Prepaid expenses and other current assets 1,041 11,315
Accounts payable, accrued expenses, and contract liabilities (375,967) (143,718)
Accrued pension and other postretirement benefits (36,838) (45,702)
Other, net (1,570) (995)
---
Net cash (used in) provided by operating activities (195,871) 39,288
---
Investing Activities
Capital expenditures (18,988) (27,250)
Proceeds from sale of assets and businesses 2,380 49,956
Net cash (used in) provided by investing activities (16,608) 22,706
---
Financing Activities
Net decrease in revolving credit facility (400,000) (215,000)
Proceeds from issuance of long-term debt 713,900 570,980
Retirement of debt and finance lease obligations (95,439) (433,197)
Payment of deferred financing costs (20,215) (17,545)
Dividends paid (6,005)
Repurchase of restricted shares for minimum tax obligations (552) (1,179)
---
Net cash provided by (used in) financing activities 197,694 (101,946)
---
Effect of exchange rate changes on cash 6,598 739
---
Net change in cash and cash equivalents (8,187) (39,213)
Cash and cash equivalents at beginning of period 485,463 92,807
---
Cash and cash equivalents at end of period $
477,276 $
53,594
===
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Three Months Ended Nine Months Ended
December 31,
December 31,
SEGMENT DATA 2020 2019 2020 2019
---
Net sales:
Systems & Support $
264,120 $
338,924 $
758,178 $
1,005,502
Aerospace Structures 162,410 368,972 649,065 1,210,729
Elimination of intersegment sales (536) (3,230) (4,357) (9,224)
---
$
425,994 $
704,666 $
1,402,886 $
2,207,007
Operating (loss) income:
Systems & Support $
19,010 $
57,434 $
74,033 $
163,820
Aerospace Structures 4,445 18,039 (254,187) 43,930
Corporate (54,745) (70,857) (90,699) (101,296)
Share-based compensation expense (3,679) (2,955) (9,086) (8,245)
---
$
(34,969) $
1,661 $
(279,939) $
98,209
Operating margin %
Systems & Support 7.2 17.0 9.8 16.3
% % % %
Aerospace Structures 2.7 4.9 (39.2) 3.6
% % % %
Consolidated (8.2) 0.2 (20.0) 4.5
% % % %
Depreciation and amortization^:
Systems & Support $
8,353 $
8,075 $
24,830 $
24,314
Aerospace Structures 12,777 20,921 297,719 77,265
Corporate 989 847 2,652 2,533
---
$
22,119 $
29,843 $
325,201 $
104,112
Amortization of acquired contract liabilities:
Systems & Support $
(4,306) $
(8,377) $
(11,569) $
(26,126)
Aerospace Structures (2,561) (8,220) (23,448) (30,027)
---
$
(6,867) $
(16,597) $
(35,017) $
(56,153)
Capital expenditures:
Systems & Support $
2,308 $
3,929 $
11,819 $
12,355
Aerospace Structures 3,718 5,910 6,368 13,915
Corporate 158 416 801 980
---
$
6,184 $
10,255 $
18,988 $
27,250
^ includes long-lived asset impairment charge
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures
We prepare and publicly release quarterly unaudited financial statements prepared in accordance with GAAP. In accordance with Securities and Exchange Commission (the "SEC") guidance on Compliance and Disclosure Interpretations, we also disclose and discuss certain non-GAAP financial measures in our public releases. Currently, the non-GAAP financial measure that we disclose is Adjusted EBITDA and Adjusted EBITDAP, which is our net income before interest, income taxes, amortization of acquired contract liabilities, curtailments, settlements and special termination benefits, legal settlements, depreciation and amortization and Adjusted EBITDA, less pension & other postretirement benefits. We disclose Adjusted EBITDA and Adjusted EBITDAP on a consolidated and Adjusted EBITDAP an operating segment basis in our earnings releases, investor conference calls and filings with the SEC. The non-GAAP financial measures that we use may not be comparable to similarly titled measures reported by other companies. Also, in the future, we may disclose different non-GAAP financial measures in order to help our investors more meaningfully evaluate and compare our future results of operations to our previously reported results of operations.
We view Adjusted EBITDA and Adjusted EBITDAP as operating performance measure and as such we believe that the GAAP financial measure most directly comparable to it is net income. In calculating Adjusted EBITDA and Adjusted EBITDAP, we exclude from net income the financial items that we believe should be separately identified to provide additional analysis of the financial components of the day-to-day operation of our business. We have outlined below the type and scope of these exclusions and the material limitations on the use of these non-GAAP financial measures as a result of these exclusions. Adjusted EBITDA and Adjusted EBITDAP are not measurements of financial performance under GAAP and should not be considered as a measure of liquidity, as an alternative to net income (loss), income from continuing operations, or as an indicator of any other measure of performance derived in accordance with GAAP. Investors and potential investors in our securities should not rely on Adjusted EBITDA or Adjusted EBITDAP as substitutes for any GAAP financial measure, including net income (loss) or income from continuing operations. In addition, we urge investors and potential investors in our securities to carefully review the reconciliation of Adjusted EBITDA and Adjusted EBITDAP to net income set forth below, in our earnings releases and in other filings with the SEC and to carefully review the GAAP financial information included as part of our Quarterly Reports on Form 10-Q and our Annual Reports on Form 10-K that are filed with the SEC, as well as our quarterly earnings releases, and compare the GAAP financial information with our Adjusted EBITDA and Adjusted EBITDAP.
Adjusted EBITDA and Adjusted EBITDAP is used by management to internally measure our operating and management performance and by investors as a supplemental financial measure to evaluate the performance of our business that, when viewed with our GAAP results and the accompanying reconciliation, we believe provides additional information that is useful to gain an understanding of the factors and trends affecting our business. We have spent more than 20 years expanding our product and service capabilities partially through acquisitions of complementary businesses. Due to the expansion of our operations, which included acquisitions, our net income has included significant charges for depreciation and amortization. Adjusted EBITDA and Adjusted EBITDAP exclude these charges and provide meaningful information about the operating performance of our business, apart from charges for depreciation and amortization. We believe the disclosure of Adjusted EBITDA and Adjusted EBITDAP helps investors meaningfully evaluate and compare our performance from quarter to quarter and from year to year. We also believe Adjusted EBITDA and Adjusted EBITDAP is a measure of our ongoing operating performance because the isolation of non-cash income and expenses, such as amortization of acquired contract liabilities, depreciation and amortization, and non-operating items, such as interest and income taxes, provides additional information about our cost structure, and, over time, helps track our operating progress. In addition, investors, securities analysts and others have regularly relied on Adjusted EBITDA and Adjusted EBITDAP to provide a financial measure by which to compare our operating performance against that of other companies in our industry.
Set forth below are descriptions of the financial items that have been excluded from our net income to calculate Adjusted EBITDA and Adjusted EBITDAP and the material limitations associated with using this non-GAAP financial measure as compared to net income:
-- Divestitures may be useful for investors to consider because they
reflect gains or losses from sale of operating units. We do not believe
these earnings necessarily reflect the current and ongoing cash earnings
related to our operations.
-- Legal settlements may be useful to investors to consider because they
reflect gains or losses from disputes with third parties. We do not
believe that these earnings necessarily reflect the current and ongoing
cash earnings related to our operations.
-- Non-service defined benefit income (inclusive of the adoption of ASU
2017-07 and certain pension related transactions such as curtailments,
settlements, early retirement or other incentives) may be useful to
investors to consider because they represent the cost of post-retirement
benefits to plan participants, net of the assumption of returns on the
plan's assets and are not indicative of the cash paid for such benefits.
We do not believe these earnings (expenses) necessarily reflect the
current and ongoing cash earnings related to our operations.
-- Amortization of acquired contract liabilities may be useful for
investors to consider because it represents the non-cash earnings on the
fair value of below market contracts acquired through acquisitions. We
do not believe these earnings necessarily reflect the current and
ongoing cash earnings related to our operations.
-- Amortization expense and nonrecurring asset impairments (including
goodwill, intangible asset impairments, and nonrecurring rotable
inventory impairments) may be useful for investors to consider because
it represents the estimated attrition of our acquired customer base and
the diminishing value of tradenames, product rights, licenses, or, in
the case of goodwill, other assets that are not individually identified
and separately recognized under U.S. GAAP, or, in the case of
nonrecurring asset impairments, the impact of unusual and nonrecurring
events affecting the estimated recoverability of existing assets. We do
not believe these charges necessarily reflect the current and ongoing
cash charges related to our operating cost structure,
-- Depreciation may be useful for investors to consider because they
generally represent the wear and tear on our property and equipment used
in our operations. We do not believe these charges necessarily reflect
the current and ongoing cash charges related to our operating cost
structure.
-- The amount of interest expense and other we incur may be useful for
investors to consider and may result in current cash inflows or
outflows. However, we do not consider the amount of interest expense and
other to be a representative component of the day-to-day operating
performance of our business.
-- Income tax expense may be useful for investors to consider because it
generally represents the taxes which may be payable for the period and
the change in deferred income taxes during the period and may reduce the
amount of funds otherwise available for use in our business. However,
we do not consider the amount of income tax expense to be a
representative component of the day-to-day operating performance of our
business.
Management compensates for the above-described limitations of using non-GAAP measures by using a non-GAAP measure only to supplement our GAAP results and to provide additional information that is useful to gain an understanding of the factors and trends affecting our business.
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
The following table shows our Adjusted EBITDA and Adjusted EBITDAP reconciled to our net income for the
ndicated periods (in thousands):
Three Months Ended Nine Months Ended
December 31,
December 31,
Adjusted Earnings before Interest, Taxes, Depreciation, 2020 2019 (1) 2020 2019 (1)
Amortization, and Pension (Adjusted EBITDAP):
---
Net (loss) income $
(68,116) $
(13,206) $
(377,391) $
45,952
Add-back:
Income tax expense 698 (3,512) 2,383 12,213
Interest expense and other, net 44,881 33,178 132,344 96,069
Curtailment gain & special termination, net (14,373)
Union incentives 1,400 7,071
Loss on sale of assets and businesses, net 45,273 60,019 46,020 55,190
Impairment of rotable inventory 23,689 23,689
Legal judgment gain, net of expenses (3,857) (9,257)
Amortization of acquired contract liabilities (6,867) (16,597) (35,017) (56,153)
Depreciation and amortization^ 22,119 29,843 325,201 104,112
---
Adjusted Earnings before Interest, Taxes, Depreciation $
61,677 $
87,268 $
117,229 $
240,824
and Amortization ("Adjusted EBITDA")
---
Non-service defined benefit income (excluding settlements) (12,432) (14,799) (37,275) (41,652)
---
Adjusted Earnings before Interest, Taxes, Depreciation $
49,245 $
72,469 $
79,954 $
199,172
and Amortization, and Pension ("Adjusted EBITDAP")
===
Net sales $
425,994 $
704,666 $
1,402,886 $
2,207,007
---
Net (loss) income margin (16.0) (1.9) (26.9) 2.1
% % % %
===
Adjusted EBITDAP margin 11.7 10.5 5.8 9.3
% % % %
===
(1) As adjusted
^ includes long-lived asset impairment charge in the first quarter of
fiscal 2021
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Three Months Ended December 31, 2020
Segment Data
Adjusted Earnings before Interest, Taxes, Depreciation, Total Systems & Aerospace Corporate/
Amortization, and Pension (EBITDAP): Support Structures Eliminations*
---
Net loss $
(68,116)
Add-back:
Non-service defined benefit income (12,432)
Income tax expense 698
Interest expense and other, net 44,881
---
Operating (loss) income $
(34,969) $
19,010 $
4,445 $
(58,424)
Loss on sales of assets & businesses, net 45,273 45,273
Impairment of rotable inventory 23,689 23,689
Amortization of acquired contract liabilities (6,867) (4,306) (2,561)
Depreciation and amortization 22,119 8,353 12,777 989
---
Adjusted Earnings (Losses) before Interest, Taxes, $
49,245 $
46,746 $
14,661 $
(12,162)
Depreciation and Amortization, and Pension
("Adjusted EBITDAP")
===
Net sales $
425,994 $
264,120 $
162,410 $
(536)
===
Adjusted EBITDAP margin 11.7 18.0 9.2
% % %
n/a
===
Nine Months Ended December 31, 2020
Segment Data
Adjusted Earnings before Interest, Taxes, Depreciation, Total Systems & Aerospace Corporate/
Amortization, and Pension (EBITDAP): Support Structures Eliminations*
---
Net loss $
(377,391)
Add-back:
Non-service defined benefit income (37,275)
Income tax expense 2,383
Interest expense and other, net 132,344
---
Operating income (loss) $
(279,939) $
74,033 $
(254,187) $
(99,785)
Loss on sales of assets & businesses, net 46,020 46,020
Impairment of rotable inventory 23,689 23,689
Amortization of acquired contract liabilities (35,017) (11,569) (23,448)
Depreciation and amortization^ 325,201 24,830 297,719 2,652
---
Adjusted Earnings (Losses) before Interest, Taxes, $
79,954 $
110,983 $
20,084 $
(51,113)
Depreciation and Amortization, and Pension
("Adjusted EBITDAP")
===
Net sales $
1,402,886 $
758,178 $
649,065 $
(4,357)
===
Adjusted EBITDAP margin 5.8 14.9 3.2
% % %
n/a
===
^ includes long-lived asset impairment charge in the first quarter of fiscal 2021
* Operating loss at Corporate includes share-based compensation expense.
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Three Months Ended December 31, 2019 (1)
Segment Data
Adjusted Earnings before Interest, Taxes, Depreciation, Total Systems & Aerospace Corporate/
Amortization, and Pension (EBITDAP): Support Structures Eliminations*
---
Net loss $
(13,206)
Add-back:
Non-service defined benefit income (14,799)
Income tax expense (3,512)
Interest expense and other, net 33,178
---
Operating (loss) income $
1,661 $
57,434 $
18,039 $
(73,812)
Loss on sales of assets & businesses, net 60,019 60,019
Legal judgment gain, net of expenses (3,857) (3,857)
Union incentives 1,400 1,400
Amortization of acquired contract liabilities (16,597) (8,377) (8,220)
Depreciation and amortization 29,843 8,075 20,921 847
---
Adjusted Earnings (Losses) before Interest, Taxes, $
72,469 $
57,132 $
32,140 $
(16,803)
Depreciation and Amortization, and Pension
("Adjusted EBITDAP")
===
Net sales $
704,666 $
338,924 $
368,972 $
(3,230)
===
Adjusted EBITDAP margin 10.5 17.3 8.9
% % %
n/a
===
(1) As adjusted
Nine Months Ended December 31, 2019 (1)
Segment Data
Adjusted
Earnings
before
Interest,
Taxes, Depreciation, Total Systems & Aerospace Corporate/
Amortization,
and Pension
(EBITDAP): Support Structures Eliminations*
---
Net income $
45,952
Add-back:
Non-service defined benefit income (56,025)
Income tax expense 12,213
Interest expense and other, net 96,069
---
Operating (loss) income $
98,209 $
163,820 $
43,930 $
(109,541)
Loss (gain) on sales of assets & businesses, net 55,190 (10,121) 65,311
Legal judgment gain, net of expenses (9,257) (9,257)
Union incentives 7,071 7,071
Amortization of acquired contract liabilities (56,153) (26,126) (30,027)
Depreciation and amortization 104,112 24,314 77,265 2,533
---
Adjusted Earnings (Losses) before Interest, $
199,172 $
162,008 $
88,118 $
(50,954)
Taxes, Depreciation and Amortization,
and Pension ("Adjusted EBITDAP")
===
Net sales $
2,207,007 $
1,005,502 $
1,210,729 $
(9,224)
===
Adjusted EBITDAP margin 9.3 16.5 7.5
% % %
n/a
===
(1) As adjusted
(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except per share data)
Non-GAAP Financial Measure Disclosures (continued)
Adjusted income from continuing operations, before income taxes, adjusted income from continuing operations and adjusted income from continuing operations per diluted share, before non-recurring costs have been provided for consistency and comparability. These measures should not be considered in isolation or as alternatives to income from continuing operations before income taxes, income from continuing operations and income from continuing operations per diluted share presented in accordance with GAAP. The following tables reconcile income from continuing operations before income taxes, income from continuing operations, and income from continuing operations per diluted share, before non-recurring costs.
Three Months Ended
December 31, 2020
Pre-Tax After-Tax Diluted EPS
Loss from continuing operations - GAAP $
(67,418) $
(68,116) $
(1.30)
Adjustments:
Loss on sale of assets and businesses 45,273 45,273 0.86
Impairment of rotable inventory 23,689 23,689 0.45
Restructuring costs 4,071 4,071 0.08
---
Adjusted income from continuing operations - non-GAAP $
5,615 $
4,917 $
0.09
===
Nine Months Ended
December 31, 2020
Pre-Tax After-Tax EPS
Loss from continuing operations - GAAP $
(375,008) $
(377,391) $
(7.24)
Adjustments:
Impairment of long-lived assets 252,382 252,382 4.84
Restructuring costs 32,747 32,747 0.63
Loss on sale of assets and businesses 46,020 46,020 0.88
Impairment of rotable assets 23,689 23,689 0.45
Refinancing costs 15,305 15,305 0.29
---
Adjusted loss from continuing operations - non-GAAP* $
(4,865) $
(7,248) $
(0.14)
===
* Differences due to rounding
(1) As adjusted
Three Months Ended
December 31, 2019 (1)
Pre-Tax After-Tax Diluted EPS
Loss from continuing operations - GAAP $
(16,718) $
(13,206) $
(0.26)
Adjustments:
Loss on sale of assets and businesses, net 60,019 47,415 0.94
Curtailment gain & special termination, net
Legal judgment gain, net (3,857) (3,047) (0.06)
Union incentives 1,400 1,106 0.02
Restructuring costs 4,744 3,748 0.07
Refinancing costs 3,030 2,394 0.05
---
Adjusted income from continuing operations - non-GAAP $
48,618 $
38,410 $
0.76
===
(1) As adjusted
(Continued)
FINANCIAL DATA (UNAUDITED)
T
RIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except per share data)
Non-GAAP Financial Measure Disclosures (continued)
Nine Months Ended
December 31, 2019 (1)
Pre-Tax After-Tax Diluted EPS
Income from continuing operations - GAAP $
58,165 $
45,952 $
0.91
Adjustments:
Loss on sale of assets and businesses, net 55,190 43,600 0.86
Curtailment gain & special termination, net (14,373) (11,355) (0.22)
Legal judgment gain, net (9,257) (7,313) (0.14)
Union incentives 7,071 5,586 0.11
Restructuring costs 13,490 10,657 0.21
Refinancing cost 3,030 2,394 0.05
---
Adjusted income from continuing operations - non-GAAP* $
113,316 $
89,521 $
1.77
===
* Differences due to rounding
(1) As adjusted
Adjusted Operating Income is defined as GAAP Operating Income, less expenses/gains associated with the Company's transformation, such as restructuring expenses, gains/losses on divestitures, impairments of goodwill and other assets. Management believes that this is useful in evaluating operating performance, but this measure should not be used in isolation. The following table reconciles our Operating income to Adjusted Operating income as noted above.
Three Months Ended Nine Months Ended
December 31,
December 31,
2020 2019 2020 2019
Operating (loss) income - GAAP $
(34,969) $
1,661 $
(279,939) $
98,209
Adjustments:
Loss on sale of assets and businesses, net 45,273 60,019 46,020 55,190
Impairment of long-lived assets 252,382
Impairment of rotable inventory 23,689 23,689
Restructuring costs 4,071 4,744 32,747 13,490
Legal judgment gain, net (3,857) (9,257)
Union incentives 1,400 7,071
---
Adjusted operating income - non-GAAP $
38,064 $
63,967 $
74,899 $
164,703
===
Adjusted operating margin 8.9 9.1 5.3 7.5
% % % %
===
Cash provided by operations, is provided for consistency and comparability. We also use free cash flow as a key factor in planning for and consideration of strategic acquisitions and the repayment of debt. This measure should not be considered in isolation, as a measure of residual cash flow available for discretionary purposes, or as an alternative to operating results presented in accordance with GAAP. The following table reconciles cash provided by operations to free cash flow.
Three Months Ended Nine Months Ended
December 31, December 31,
2020 2019 2020 2019
Cash provided by (used in) operating activities $
43,852 $
49,881 $
(195,871) $
39,288
Less:
Capital expenditures (6,184) (10,255) (18,988) (27,250)
---
Free cash flow (use) $
37,668 $
39,626 $
(214,859) $
12,038
===
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SOURCE Triumph Group
