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| 8-K - 8-K, DATED MAY 7, 2015 - TRIUMPH GROUP INC | form8-kq4fy2015earningsrel.htm |
Exhibit 99.1
NEWS RELEASE
Contact:
Sheila Spagnolo
Vice President - Tax & Investor Relations
Phone (610) 251-1000
sspagnolo@triumphgroup.com
TRIUMPH GROUP REPORTS FOURTH QUARTER
AND FULL FISCAL YEAR 2015 RESULTS
• | Record net sales of $1.080 billion for fourth quarter fiscal year 2015 |
• | Non-GAAP adjusted operating income for fourth quarter fiscal year 2015 was $144.9 million, reflecting an operating margin of 13% |
• | Non-GAAP adjusted net income for fourth quarter fiscal year 2015 was $85.5 million, or $1.71 per diluted share |
• | Full year revenues and non-GAAP adjusted earnings per share were $3.889 billion and $5.73 per diluted share |
• | Cash flow from operations for fiscal year 2015 before pension contributions of $112.3 million was $579.7 million |
• | Repurchased 1.2 million shares for $69.7 million during fourth quarter fiscal year 2015. As of March 31, 2015, approximately 2.3 million shares remained under share repurchase authorization |
BERWYN, Pa. - May 7, 2015 - Triumph Group, Inc. (NYSE: TGI) today reported financial results for its fourth quarter and full fiscal year ended March 31, 2015.
“Our fourth quarter results reflected the strength of our product offering and the extensive capabilities we can provide our customers across the entire aerospace supply chain, and we are pleased to have achieved record quarterly net sales,” said Richard C. Ill, Triumph’s President and Chief Executive Officer. “The Aerospace Systems Group and the Aftermarket Services Group delivered another quarter of strong operating margins with both growing on a sequential quarterly basis, and Aftermarket Services realizing organic sales growth for the fiscal year. Performance in the Aerostructures segment improved
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during the quarter with the recently transferred Gulfstream wing programs progressing well, but the segment is not yet at the level of performance we would expect on a go-forward basis.”
Mr. Ill continued, “In fiscal year 2015, we continued to invest in each of our three segments through the completion of key strategic transactions that expanded our capabilities, increased market share and extended our global footprint. We generated strong cash flow from operations and our backlog increased to over $5 billion. While work remains to be done for Triumph to realize its full potential, we are intensely focused on leveraging the strength of our portfolio and controlling our costs to drive sustainable growth and value creation.”
Fourth Quarter Fiscal 2015 Highlights
For the fourth quarter ended March 31, 2015, net sales were a record $1.080 billion, a fifteen percent increase from fiscal fourth quarter 2014 net sales of $936.4 million. Organic sales for the quarter decreased two percent primarily due to decreased production on the C-17 and the 747-8 programs.
Net income for the fourth quarter of fiscal year 2015 was $82.8 million, or $1.66 per diluted share, compared to $42.3 million, or $0.80 per diluted share, for the fourth quarter of the prior fiscal year. The quarter’s results included approximately $4.2 million pre-tax ($0.05 per diluted share) of costs related to the Jefferson Street/Red Oak facility transition. Excluding these costs, net income for the fourth quarter of fiscal 2015 was $85.5 million, or $1.71 per diluted share. Excluding non-recurring items, earnings per share for the prior fiscal year’s fourth quarter were $1.39 per diluted share. The number of shares used in computing diluted earnings per share for the fiscal year 2015 quarter was 50.0 million shares.
Modified adjusted earnings before interest, taxes, depreciation and amortization (Modified Adjusted EBITDA) for the fourth quarter of fiscal year 2015 were $149.1 million and reflected a Modified Adjusted EBITDA margin of fourteen percent. This includes a reduction of $20.5 million for the amortization of the fair value of contracts associated with the Gulfstream G650 and G280 wing programs, for which the company had previously received an upfront cash payment of $160.0 million.
During the quarter, the company repurchased 1.2 million shares of stock under the company’s existing 5.5 million share repurchase authorization. As of March 31, 2015, approximately 2.3 million shares remained under the share repurchase authorization.
Full Fiscal Year 2015 Highlights
For the fiscal year ended March 31, 2015, net sales totaled $3.889 billion, a three percent increase from fiscal year 2014 net sales of $3.763 billion. Organic sales for the fiscal year decreased five percent.
Net income for the fiscal year 2015 was 238.7 million, or $4.68 earnings per diluted share, versus $206.3 million, or $3.91 per diluted share, for fiscal year 2014. Excluding the items detailed below in Table A, net income for fiscal year 2015 was 292.1 million, or $5.73 earnings per diluted share. The prior fiscal year included approximately $72.4 million pre-tax ($0.89 per diluted share) of non-recurring costs. The number of shares used in computing diluted earnings per share for fiscal year 2015 was 51.0 shares.
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Table A
Twelve Months Ended | ||||||||||||||
March 31, 2015 | ||||||||||||||
Pre-Tax | After-Tax | Diluted EPS | Location | |||||||||||
Income from Continuing Operations - GAAP | $ | 349,294 | $ | 238,697 | $ | 4.68 | ||||||||
Non-Recurring Costs: | ||||||||||||||
Gain on legal settlement, net | (134,693 | ) | (87,281 | ) | (1.71 | ) | Corporate | |||||||
Refinancing costs | 22,615 | 14,655 | 0.29 | |||||||||||
Transaction fees - Tulsa Acquisition | 4,606 | 2,985 | 0.06 | Corporate | ||||||||||
747-8 forward loss | 151,992 | 98,491 | 1.93 | Aerostructures (EAC) ** | ||||||||||
Structures - International | 13,919 | 9,020 | 0.18 | Aerostructures | ||||||||||
Jefferson Street/Red Oak Transition Costs: | ||||||||||||||
Relocation Costs | 3,193 | 2,069 | 0.04 | Aerostructures | ||||||||||
Disruption | 13,709 | 8,883 | 0.17 | Aerostructures (EAC) ** | ||||||||||
Accelerated Depreciation | 7,126 | 4,618 | 0.09 | Aerostructures (EAC) ** | ||||||||||
Adjusted Income from continuing operations - non-GAAP | $ | 431,761 | $ | 292,137 | $ | 5.73 | ||||||||
** EAC - estimated costs at completion with respect to contracts within the scope of Accounting Standards Codification 605-35, "Revenue-Construction-Type and Production-Type Contracts" | ||||||||||||||
During fiscal year 2015, the company generated $579.7 million of cash flow from operations before pension contributions of $112.3 million; after these contributions, cash flow from operations was $467.3 million.
Segment Results
Aerostructures
The Aerostructures segment reported net sales of $704.5 million in the fourth quarter of fiscal year 2015 compared to $632.6 million in the prior fiscal year period. Organic sales for the quarter declined three percent primarily due to decreased production on the C-17 and 747-8 programs. For fiscal year 2015, net sales were $2.508 billion as compared to $2.612 billion for the prior fiscal year. For the fourth quarter of fiscal year 2015, operating income was $86.9 million, compared to operating income of $36.2 million for the prior year period, and included $4.2 million of pre-tax charges related to the Jefferson Street/Red Oak facility transition. Operating income for fiscal year 2015 was $127.5 million, compared to $255.0 million for the prior fiscal year. The segment’s operating results for the quarter included a net unfavorable cumulative catch-up adjustment on long-term contracts of $1.2 million primarily related to the C-17 program. The segment’s operating margin for the quarter was twelve percent. Excluding the Jefferson Street/Red Oak facility transition costs and the 747-8 program, the segment’s operating margin for the quarter was fifteen percent.
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Aerospace Systems
The Aerospace Systems segment reported record net sales of $301.2 million in the fourth quarter of fiscal year 2015 compared to $235.3 million in the prior year period, an increase of twenty-eight percent, reflecting the impact of the Triumph Actuation Systems-Yakima and Triumph Actuation Systems-UK and IOM acquisitions completed at the end of the first quarter of fiscal year 2015. Organic sales for the quarter declined three percent primarily due to decreased production on the V-22 program. For the fiscal year 2015, net sales increased twenty-five percent to $1.089 billion from $871.8 million for the prior fiscal year. Operating income for the fourth quarter of fiscal year 2015 was a record $58.6 million compared to $42.8 million for the prior year period, an increase of thirty-seven percent, reflecting a record operating margin of twenty percent. Operating income for fiscal year 2015 was $184.0 million, compared to $149.7 million for the prior fiscal year, an increase of twenty-three percent, reflecting an operating margin of seventeen percent. Organic operating margin for the quarter and for the full fiscal year were nineteen percent and eighteen percent respectively as compared to eighteen percent and seventeen percent for the prior year respective periods.
Aftermarket Services
The Aftermarket Services segment reported net sales in the fourth quarter of fiscal year 2015 of $81.4 million compared to $70.5 million in the prior year period, an increase of fifteen percent, reflecting the impact of the Triumph Aviation Services-NAAS Division acquisition completed early in the third quarter of fiscal year 2015. Organic sales growth for the quarter was six percent. For the fiscal year 2015, net sales increased six percent to $304.0 million from $287.3 million for the prior fiscal year. Operating income for the fourth quarter of fiscal year 2015 was $13.3 million compared to $11.6 million for the prior year period, an increase of fifteen percent, reflecting an operating margin of sixteen percent. Operating income for fiscal year 2015 was $47.9 million, compared to $42.3 million for the prior fiscal year. Operating margin for the fiscal year was sixteen percent.
Outlook
Mr. Ill continued, “Fiscal year 2016 will be a transition period for the company. We are in the process of conducting a comprehensive review of our operations with a focus on identifying opportunities to improve execution and profitability, expand margins, generate cash flow and leverage our scale. Given this, we will not be providing financial guidance at this time.”
Conference Call
Triumph Group will hold a conference call tomorrow, May 8th at 8:30 a.m. (ET) to discuss the fourth quarter and full fiscal year 2015 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 May 8th to May 15th by calling (888) 266-2081 (Domestic) or (703) 925-2533 (International), passcode #1655271.
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About Triumph Group
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 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 financial and operational performance. 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, 2014.
FINANCIAL DATA (UNAUDITED) ON FOLLOWING PAGES
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FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(in thousands, except per share data)
Three Months Ended | Twelve Months Ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
CONDENSED STATEMENTS OF INCOME | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Net sales | $ | 1,080,277 | $ | 936,410 | $ | 3,888,722 | $ | 3,763,254 | ||||||||
Operating income | 140,717 | 80,908 | 434,673 | 400,004 | ||||||||||||
Interest expense and other | 14,059 | 17,625 | 85,379 | 87,771 | ||||||||||||
Income tax expense | 43,818 | 20,979 | 110,597 | 105,977 | ||||||||||||
Net income | $ | 82,840 | $ | 42,304 | $ | 238,697 | $ | 206,256 | ||||||||
Earnings per share - basic: | ||||||||||||||||
Net income | $ | 1.66 | $ | 0.81 | $ | 4.70 | $ | 3.99 | ||||||||
Weighted average common shares outstanding - basic | 49,823 | 52,199 | 50,796 | 51,711 | ||||||||||||
Earnings per share - diluted: | ||||||||||||||||
Net income | $ | 1.66 | $ | 0.80 | $ | 4.68 | $ | 3.91 | ||||||||
Weighted average common shares outstanding - diluted | 49,985 | 52,752 | 51,005 | 52,787 | ||||||||||||
Dividends declared and paid per common share | $ | 0.04 | $ | 0.04 | $ | 0.16 | $ | 0.16 | ||||||||
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FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except per share data)
BALANCE SHEET | Unaudited | Audited | ||||||
March 31, | March 31, | |||||||
2015 | 2014 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 32,617 | $ | 28,998 | ||||
Accounts receivable, net | 523,999 | 517,304 | ||||||
Inventories, net of unliquidated progress payments of $189,923 and $165,019 | 1,272,879 | 1,111,767 | ||||||
Rotable assets | 48,820 | 41,666 | ||||||
Deferred income taxes | 156,100 | 57,308 | ||||||
Prepaid and other current assets | 23,100 | 24,897 | ||||||
Current assets | 2,057,515 | 1,781,940 | ||||||
Property and equipment, net | 948,852 | 931,430 | ||||||
Goodwill | 2,044,890 | 1,791,891 | ||||||
Intangible assets, net | 957,387 | 978,171 | ||||||
Other, net | 73,365 | 69,954 | ||||||
Total assets | $ | 6,082,009 | $ | 5,553,386 | ||||
Liabilities & Stockholders' Equity | ||||||||
Current portion of long-term debt | $ | 42,255 | $ | 49,575 | ||||
Accounts payable | 427,448 | 317,334 | ||||||
Accrued expenses | 425,714 | 273,290 | ||||||
Current liabilities | 895,417 | 640,199 | ||||||
Long-term debt, less current portion | 1,337,141 | 1,500,808 | ||||||
Accrued pension and post-retirement benefits, noncurrent | 538,381 | 508,524 | ||||||
Deferred income taxes, noncurrent | 422,234 | 385,188 | ||||||
Other noncurrent liabilities | 754,053 | 234,756 | ||||||
Stockholders' Equity: | ||||||||
Common stock, $.001 par value, 100,000,000 shares authorized, 52,460,020 and 52,459,020 shares issued; 49,273,053 and 52,159,020 shares outstanding | 51 | 52 | ||||||
Capital in excess of par value | 850,939 | 866,281 | ||||||
Treasury stock, at cost, 3,187,867 and 300,000 shares | (203,514 | ) | (19,134 | ) | ||||
Accumulated other comprehensive income | (198,910 | ) | (18,908 | ) | ||||
Retained earnings | 1,686,217 | 1,455,620 | ||||||
Total stockholders' equity | 2,134,783 | 2,283,911 | ||||||
Total liabilities and stockholders' equity | $ | 6,082,009 | $ | 5,553,386 | ||||
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FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
SEGMENT DATA | Three Months Ended | Twelve Months Ended | ||||||||||||||
March 31, | March 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net Sales: | ||||||||||||||||
Aerostructures | $ | 704,478 | $ | 632,601 | $ | 2,507,878 | $ | 2,612,439 | ||||||||
Aerospace Systems | 301,165 | 235,339 | 1,089,117 | 871,750 | ||||||||||||
Aftermarket Services | 81,372 | 70,463 | 304,013 | 287,343 | ||||||||||||
Elimination of inter-segment sales | (6,738 | ) | (1,993 | ) | (12,286 | ) | (8,278 | ) | ||||||||
$ | 1,080,277 | $ | 936,410 | $ | 3,888,722 | $ | 3,763,254 | |||||||||
Operating Income (Loss): | ||||||||||||||||
Aerostructures | $ | 86,861 | $ | 36,208 | $ | 127,495 | $ | 254,993 | ||||||||
Aerospace Systems | 58,612 | 42,834 | 184,042 | 149,721 | ||||||||||||
Aftermarket Services | 13,317 | 11,586 | 47,931 | 42,264 | ||||||||||||
Corporate | (18,073 | ) | (9,720 | ) | 75,205 | (46,974 | ) | |||||||||
$ | 140,717 | $ | 80,908 | $ | 434,673 | $ | 400,004 | |||||||||
Depreciation and Amortization: | ||||||||||||||||
Aerostructures | $ | 25,404 | $ | 31,300 | $ | 100,096 | $ | 114,302 | ||||||||
Aerospace Systems | 13,173 | 9,542 | 45,200 | 37,453 | ||||||||||||
Aftermarket Services | 2,422 | 1,926 | 8,559 | 7,529 | ||||||||||||
Corporate | 951 | 1,229 | 4,468 | 4,993 | ||||||||||||
$ | 41,950 | $ | 43,997 | $ | 158,323 | $ | 164,277 | |||||||||
Amortization of Acquired Contract Liabilities: | ||||||||||||||||
Aerostructures | (24,408 | ) | (5,071 | ) | (38,719 | ) | (25,207 | ) | ||||||||
Aerospace Systems | (11,993 | ) | (3,185 | ) | (37,014 | ) | (17,422 | ) | ||||||||
$ | (36,401 | ) | $ | (8,256 | ) | $ | (75,733 | ) | $ | (42,629 | ) | |||||
Capital Expenditures: | ||||||||||||||||
Aerostructures | $ | 18,277 | $ | 34,993 | $ | 72,242 | $ | 167,198 | ||||||||
Aerospace Systems | 5,979 | 5,946 | 30,531 | 21,935 | ||||||||||||
Aftermarket Services | 220 | 3,145 | 5,645 | 13,940 | ||||||||||||
Corporate | 358 | 531 | 1,586 | 3,341 | ||||||||||||
$ | 24,834 | $ | 44,615 | $ | 110,004 | $ | 206,414 | |||||||||
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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, which is our net income before interest, income taxes, amortization of acquired contract liabilities, curtailments, settlements and early retirement incentives, legal settlements, depreciation and amortization. We disclose Adjusted EBITDA on a consolidated and 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 as an 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, 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 is not a measurement 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 as a substitute 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 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.
Adjusted EBITDA 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 15 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 excludes these charges and provides meaningful information about the operating performance of our business, apart from charges for depreciation and amortization. We believe the disclosure of Adjusted EBITDA helps investors meaningfully evaluate and compare our performance from quarter to quarter and from year to year. We also believe Adjusted EBITDA 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 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 the material limitations associated with using this non-GAAP financial measure as compared to net income:
• | 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. |
• | Curtailments, settlements and early retirement incentives may be useful to investors to consider because it represents the current period impact of the change in defined benefit obligation due to the reduction in future service costs. We do not believe these charges (gains) necessarily reflect the current and ongoing cash earnings related to our operations. |
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(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
• | 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 expenses may be useful for investors to consider because it represents the estimated attrition of our acquired customer base and the diminishing value of product rights and licenses. 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.
Modified Adjusted EBITDA is included to adjust for the impacts of our recent relocation from our Jefferson Street Facility and our provision for forward losses on our 747-8 long-term contract, in order to show the more comparable results period to period.
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(Continued)
The following table shows our Adjusted EBITDA and Modified Adjusted EBITDA reconciled to our net income for the indicated periods (in thousands):
Three Months Ended | Twelve Months Ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA): | ||||||||||||||||
Net Income | $ | 82,840 | $ | 42,304 | $ | 238,697 | $ | 206,256 | ||||||||
Add-back: | ||||||||||||||||
Income tax expense | 43,818 | 20,979 | 110,597 | 105,977 | ||||||||||||
Interest expense and other | 14,059 | 17,625 | 85,379 | 87,771 | ||||||||||||
Curtailments, settlements and early retirement incentives | — | (395 | ) | — | 1,166 | |||||||||||
Gain on Legal Settlement, net | — | — | (134,693 | ) | — | |||||||||||
Amortization of acquired contract liabilities | (36,401 | ) | (8,256 | ) | (75,733 | ) | (42,629 | ) | ||||||||
Depreciation and amortization | 41,950 | 43,997 | 158,323 | 164,277 | ||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 146,266 | $ | 116,254 | $ | 382,570 | $ | 522,818 | ||||||||
747-8 forward loss | $ | — | $ | — | $ | 151,992 | $ | — | ||||||||
Jefferson Street Move costs | 2,844 | 41,806 | 16,902 | 56,003 | ||||||||||||
Modified Adjusted EBITDA | $ | 149,110 | $ | 158,060 | $ | 551,464 | $ | 578,821 | ||||||||
Net sales | 1,080,277 | 936,410 | 3,888,722 | 3,763,254 | ||||||||||||
Adjusted EBITDA Margin | 14.0% | 12.5% | 10.0% | 14.1% | ||||||||||||
Modified Adjusted EBITDA Margin | 14.3% | 17.0% | 14.5% | 15.6% | ||||||||||||
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FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Three Months Ended March 31, 2015 | |||||||||||||||||||||
Segment Data | |||||||||||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | Total | Aerostructures | Aerospace Systems | Aftermarket Services | Corporate/Eliminations | ||||||||||||||||
Net Income | $ | 82,840 | |||||||||||||||||||
Add-back: | |||||||||||||||||||||
Income tax expense | 43,818 | ||||||||||||||||||||
Interest expense and other | 14,059 | ||||||||||||||||||||
Operating Income (loss) | $ | 140,717 | $ | 86,861 | $ | 58,612 | $ | 13,317 | $ | (18,073 | ) | ||||||||||
Amortization of acquired contract liabilities | (36,401 | ) | (24,408 | ) | (11,993 | ) | — | — | |||||||||||||
Depreciation and amortization | 41,950 | 25,404 | 13,173 | 2,422 | 951 | ||||||||||||||||
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 146,266 | $ | 87,857 | $ | 59,792 | $ | 15,739 | $ | (17,122 | ) | ||||||||||
Jefferson Street Move costs | 2,844 | 2,844 | — | — | — | ||||||||||||||||
Modified Adjusted EBITDA | $ | 149,110 | $ | 90,701 | $ | 59,792 | $ | 15,739 | $ | (17,122 | ) | ||||||||||
Net sales | $ | 1,080,277 | $ | 704,478 | $ | 301,165 | $ | 81,372 | $ | (6,738 | ) | ||||||||||
Adjusted EBITDA Margin | 14.0% | 12.9% | 20.7% | 19.3% | n/a | ||||||||||||||||
Modified Adjusted EBITDA Margin | 14.3% | 13.3% | 20.7% | 19.3% | n/a | ||||||||||||||||
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(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Twelve Months Ended March 31, 2015 | |||||||||||||||||||||
Segment Data | |||||||||||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | Total | Aerostructures | Aerospace Systems | Aftermarket Services | Corporate/Eliminations | ||||||||||||||||
Net Income | $ | 238,697 | |||||||||||||||||||
Add-back: | |||||||||||||||||||||
Income tax expense | 110,597 | ||||||||||||||||||||
Interest expense and other | 85,379 | ||||||||||||||||||||
Operating Income (loss) | $ | 434,673 | $ | 127,495 | $ | 184,042 | $ | 47,931 | $ | 75,205 | |||||||||||
Gain on legal settlement, net | (134,693 | ) | — | — | — | (134,693 | ) | ||||||||||||||
Amortization of acquired contract liabilities | (75,733 | ) | (38,719 | ) | (37,014 | ) | — | — | |||||||||||||
Depreciation and amortization | 158,323 | 100,096 | 45,200 | 8,559 | 4,468 | ||||||||||||||||
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 382,570 | $ | 188,872 | $ | 192,228 | $ | 56,490 | $ | (55,020 | ) | ||||||||||
747-8 forward loss | $ | 151,992 | $ | 151,992 | $ | — | $ | — | $ | — | |||||||||||
Jefferson Street Move costs | 16,902 | 16,902 | — | — | — | ||||||||||||||||
Modified Adjusted EBITDA | $ | 551,464 | $ | 357,766 | $ | 192,228 | $ | 56,490 | $ | (55,020 | ) | ||||||||||
Net sales | $ | 3,888,722 | $ | 2,507,878 | $ | 1,089,117 | $ | 304,013 | $ | (12,286 | ) | ||||||||||
Adjusted EBITDA Margin | 10.0% | 7.6% | 18.3% | 18.6% | n/a | ||||||||||||||||
Modified Adjusted EBITDA Margin | 14.5% | 14.5% | 18.3% | 18.6% | n/a | ||||||||||||||||
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(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Three Months Ended March 31, 2014 | |||||||||||||||||||||
Segment Data | |||||||||||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | Total | Aerostructures | Aerospace Systems | Aftermarket Services | Corporate / Eliminations | ||||||||||||||||
Net Income | $ | 42,304 | |||||||||||||||||||
Add-back: | |||||||||||||||||||||
Income tax expense | 20,979 | ||||||||||||||||||||
Interest expense and other | 17,625 | ||||||||||||||||||||
Operating income (loss) | $ | 80,908 | $ | 36,208 | $ | 42,834 | $ | 11,586 | $ | (9,720 | ) | ||||||||||
Pension settlement charge | (395 | ) | — | — | — | (395 | ) | ||||||||||||||
Amortization of acquired contract liabilities | (8,256 | ) | (5,071 | ) | (3,185 | ) | — | — | |||||||||||||
Depreciation and amortization | 43,997 | 31,300 | 9,542 | 1,926 | 1,229 | ||||||||||||||||
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 116,254 | $ | 62,437 | $ | 49,191 | $ | 13,512 | $ | (8,886 | ) | ||||||||||
Jefferson Street Move costs | $ | 41,806 | $ | 41,806 | $ | — | $ | — | $ | — | |||||||||||
Modified Adjusted EBITDA | $ | 158,060 | $ | 104,243 | $ | 49,191 | $ | 13,512 | $ | (8,886 | ) | ||||||||||
Net sales | $ | 936,410 | $ | 632,601 | $ | 235,339 | $ | 70,463 | $ | (1,993 | ) | ||||||||||
Adjusted EBITDA Margin | 12.5% | 9.9% | 21.2% | 19.2% | n/a | ||||||||||||||||
Modified Adjusted EBITDA Margin | 17.0% | 16.6% | 21.2% | 19.2% | n/a | ||||||||||||||||
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(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Twelve Months Ended March 31, 2014 | |||||||||||||||||||||
Segment Data | |||||||||||||||||||||
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA): | Total | Aerostructures | Aerospace Systems | Aftermarket Services | Corporate / Eliminations | ||||||||||||||||
Net Income | $ | 206,256 | |||||||||||||||||||
Add-back: | |||||||||||||||||||||
Income tax expense | 105,977 | ||||||||||||||||||||
Interest expense and other | 87,771 | ||||||||||||||||||||
Operating income (loss) | $ | 400,004 | $ | 254,993 | $ | 149,721 | $ | 42,264 | $ | (46,974 | ) | ||||||||||
Pension Settlement Charge | 1,166 | — | — | — | 1,166 | ||||||||||||||||
Amortization of acquired contract liabilities | (42,629 | ) | (25,207 | ) | (17,422 | ) | — | — | |||||||||||||
Depreciation and amortization | 164,277 | 114,302 | 37,453 | 7,529 | 4,993 | ||||||||||||||||
Adjusted Earnings (Losses) before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") | $ | 522,818 | $ | 344,088 | $ | 169,752 | $ | 49,793 | $ | (40,815 | ) | ||||||||||
Jefferson Street Move costs | $ | 56,003 | $ | 56,003 | $ | — | $ | — | $ | — | |||||||||||
Modified Adjusted EBITDA | $ | 578,821 | $ | 400,091 | $ | 169,752 | $ | 49,793 | $ | (40,815 | ) | ||||||||||
Net sales | $ | 3,763,254 | $ | 2,612,439 | $ | 871,750 | $ | 287,343 | $ | (8,278 | ) | ||||||||||
Adjusted EBITDA Margin | 14.1% | 13.3% | 19.9% | 17.3% | n/a | ||||||||||||||||
Modified Adjusted EBITDA Margin | 15.6% | 15.5% | 19.9% | 17.3% | n/a | ||||||||||||||||
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(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
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 has 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 | ||||||||||||||
March 31, 2015 | ||||||||||||||
Pre-Tax | After-Tax | Diluted EPS | Location | |||||||||||
Income from Continuing Operations - GAAP | $ | 126,658 | $ | 82,840 | $ | 1.66 | ||||||||
Adjustments: | ||||||||||||||
Jefferson Street Move: | ||||||||||||||
Disruption | 2,844 | 1,843 | 0.04 | Aerostructures (EAC) ** | ||||||||||
Accelerated Depreciation | 1,326 | 859 | 0.02 | Aerostructures (EAC) ** | ||||||||||
Adjusted Income from continuing operations - non-GAAP | $ | 130,828 | $ | 85,542 | $ | 1.71 | * | |||||||
* Difference due to rounding. | ||||||||||||||
** EAC - estimated costs at completion with respect to contracts within the scope of Accounting Standards Codification 605-35, "Revenue-Construction-Type and Production-Type Contracts" | ||||||||||||||
The following table reconciles our Operating income to Adjusted Operating income as noted above.
Three Months Ended | ||||
March 31, 2015 | ||||
Operating income - GAAP | $ | 140,717 | ||
Adjustments: | ||||
Jefferson Street Move: | ||||
Disruption | 2,844 | |||
Accelerated Depreciation | 1,326 | |||
Adjusted Operating income - non-GAAP | $ | 144,887 | ||
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(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Twelve Months Ended | ||||||||||||||
March 31, 2015 | ||||||||||||||
Pre-Tax | After-Tax | Diluted EPS | Location | |||||||||||
Income from Continuing Operations - GAAP | $ | 349,294 | $ | 238,697 | $ | 4.68 | ||||||||
Adjustments | ||||||||||||||
Gain on legal settlement, net | (134,693 | ) | (87,281 | ) | (1.71 | ) | Corporate | |||||||
Refinancing costs | 22,615 | 14,655 | 0.29 | |||||||||||
Transaction fees - Tulsa Acquisition | 4,606 | 2,985 | 0.06 | Corporate | ||||||||||
747-8 forward loss | 151,992 | 98,491 | 1.93 | Aerostructures (EAC) ** | ||||||||||
Structures - International | 13,919 | 9,020 | 0.18 | Aerostructures | ||||||||||
Relocation Costs | 3,193 | 2,069 | 0.04 | Aerostructures | ||||||||||
Jefferson Street Move: | ||||||||||||||
Disruption | 13,709 | 8,883 | 0.17 | Aerostructures (EAC) ** | ||||||||||
Accelerated Depreciation | 7,126 | 4,618 | 0.09 | Aerostructures (EAC) ** | ||||||||||
Adjusted Income from continuing operations - non-GAAP | $ | 431,761 | $ | 292,137 | $ | 5.73 | ||||||||
* Difference due to rounding. | ||||||||||||||
** EAC - estimated costs at completion with respect to contracts within the scope of Accounting Standards Codification 605-35, "Revenue-Construction-Type and Production-Type Contracts" | ||||||||||||||
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(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Three Months Ended | ||||||||||||||
March 31, 2014 | ||||||||||||||
Pre-Tax | After-Tax | Diluted EPS | ||||||||||||
Income from Continuing Operations - GAAP | $ | 63,283 | $ | 42,304 | $ | 0.80 | ||||||||
Adjustments: | ||||||||||||||
Pension settlement charge | (395 | ) | (256 | ) | (0.00) | Corporate | ||||||||
Early retirement incentives | 916 | 594 | 0.01 | Corporate | ||||||||||
Relocation costs (including interest) | 24,125 | 15,633 | 0.30 | Aerostructures (Primarily) | ||||||||||
Jefferson Street Move: | ||||||||||||||
Disruption | 17,801 | 11,535 | 0.22 | Aerostructures (EAC) ** | ||||||||||
Accelerated Depreciation | 5,643 | 3,657 | 0.07 | Aerostructures (EAC) ** | ||||||||||
Adjusted Income from continuing operations - non-GAAP | $ | 111,373 | $ | 73,467 | $ | 1.39 | * | |||||||
* Difference due to rounding. | ||||||||||||||
** EAC - estimated costs at completion with respect to contracts within the scope of Accounting Standards Codification 605-35, "Revenue-Construction-Type and Production-Type Contracts" | ||||||||||||||
Twelve Months Ended | ||||||||||||||
March 31, 2014 | ||||||||||||||
Pre-Tax | After-Tax | Diluted EPS | ||||||||||||
Income from Continuing Operations - GAAP | $ | 312,233 | $ | 206,256 | $ | 3.91 | ||||||||
Adjustments: | ||||||||||||||
Settlements and curtailments, net | 1,166 | 756 | 0.01 | Corporate | ||||||||||
Early retirement incentives | 916 | 594 | 0.01 | Corporate | ||||||||||
Relocation costs (including interest) | 31,910 | 20,678 | 0.39 | Aerostructures (Primarily) | ||||||||||
Jefferson Street Move: | ||||||||||||||
Disruption | 24,714 | 16,015 | 0.30 | Aerostructures (EAC) ** | ||||||||||
Accelerated Depreciation | 13,676 | 8,862 | 0.17 | Aerostructures (EAC) ** | ||||||||||
Adjusted Income from continuing operations - non-GAAP | $ | 384,615 | $ | 253,161 | $ | 4.80 | * | |||||||
* Difference due to rounding. | ||||||||||||||
** EAC - estimated costs at completion with respect to contracts within the scope of Accounting Standards Codification 605-35, "Revenue-Construction-Type and Production-Type Contracts" | ||||||||||||||
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(Continued)
FINANCIAL DATA (UNAUDITED)
TRIUMPH GROUP, INC. AND SUBSIDIARIES
(dollars in thousands)
Non-GAAP Financial Measure Disclosures (continued)
Cash provided by operations, before pension contributions has been provided for consistency and comparability. We also use free cash flow available for debt reduction as a key factor in planning for and consideration of strategic acquisitions, stock repurchases 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, before pension contributions to cash provided by operations, as well as cash provided by operations to free cash flow available for debt reduction.
Twelve Months Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Cash provided by operations, before pension contributions | $ | 579,670 | $ | 181,483 | ||||
Pension contributions | 112,338 | 46,347 | ||||||
Cash provided by operations | 467,332 | 135,136 | ||||||
Less: | ||||||||
Capital expenditures | 110,004 | 206,414 | ||||||
Dividends | 8,100 | 8,334 | ||||||
Free cash flow available for debt reduction, acquisitions and share repurchases | $ | 349,228 | $ | (79,612 | ) | |||
We use "Net Debt to Capital" as a measure of financial leverage. The following table sets forth the computation of Net Debt to Capital:
March 31, | March 31, | |||||||
2015 | 2014 | |||||||
Calculation of Net Debt | ||||||||
Current portion | $ | 42,255 | $ | 49,575 | ||||
Long-term debt | 1,337,141 | 1,500,808 | ||||||
Total debt | 1,379,396 | 1,550,383 | ||||||
Less: Cash | 32,617 | 28,998 | ||||||
Net debt | $ | 1,346,779 | $ | 1,521,385 | ||||
Calculation of Capital | ||||||||
Net debt | $ | 1,346,779 | $ | 1,521,385 | ||||
Stockholders' equity | 2,134,783 | 2,283,911 | ||||||
Total capital | $ | 3,481,562 | $ | 3,805,296 | ||||
Percent of net debt to capital | 38.7 | % | 40.0 | % | ||||
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