TRIUMPH'S FOURTH QUARTER FISCAL 2022 RESULTS DEMONSTRATE IMPROVING PROFITABILITY AND CASH FLOW; PROVIDES FISCAL 2023 GUIDANCE

BERWYN, Pa., May 18, 2022 /PRNewswire/ -- Triumph Group, Inc. (NYSE: TGI) ("TRIUMPH" or the "Company") today reported financial results for its fourth quarter and fiscal 2022, which ended March 31, 2022.

• Net sales of $386.7 million
• Operating income of $38.8 million with operating margin of 10%; adjusted operating income of $43.0 million with adjusted operating margin of 11%
• Net loss of $10.6 million, or ($0.16) per share; adjusted net income of $25.6 million, or $0.39 per diluted share
• Cash flow provided by operations of $33.0 million; free cash flow of $29.1 million

• Net sales of $1.5 billion
• Operating income of $104.3 million with operating margin of 7%; adjusted operating income of $135.0 million with adjusted operating margin of 9%
• Net loss of $42.8 million, or ($0.66) per share; adjusted net income of $51.8 million, or $0.79 per diluted share
• Cash flow used in operations of $137.0 million; free cash use of $156.7 million

• Net sales between $1.2 billion - $1.3 billion
• Earnings per diluted share of between $0.40 - $0.60
• Cash used in operations of ($30.0) million to ($40.0) million, includes core cash flow from operations of between $30.0 million - $45.0 million

"TRIUMPH continued to deliver improving operating margin and cash flow, both sequentially and year over year, thanks to our talented and dedicated global team." stated Dan Crowley, TRIUMPH's chairman, president and chief executive officer. "We are pleased to provide financial outlook for fiscal 2023 powered by the diversity of our people, our highly engineered products, and the programs and markets we serve.  With a growing and profitable backlog, TRIUMPH is well positioned to benefit from continued strength in military and freighter markets and the anticipated recovery in commercial aviation production and aftermarket demand over the next several years."

"Mr. Crowley continued, "During fiscal 2022 we completed several important milestones including divesting our build to print metallic structures businesses, completing 747 production and streamlining our organizational structure to reduce cost and enhance communication and efficiencies.  In fiscal 2023 we will expand our investment in operations, products and people to maximize value for all stakeholders."

Excluding divestitures and sunsetting programs, sales for the fourth quarter of fiscal 2022 were down 2% organically from the prior year period due to declines in commercial widebody production and timing of military OEM deliveries, partially offset by increases in commercial narrow body production.

Fourth quarter operating income of $38.8 million includes $8.6 million of restructuring costs related to our structures facility exits and $4.3 million reduction of prior period losses on sales of assets and businesses.  Cost of sales benefited from the Aviation Manufacturing Jobs Protection Program by $11.4 million in the quarter.  Net loss for the fourth quarter of fiscal 2022 was $10.6 million, or ($0.16) per share and includes $32.0 million non-cash pension settlement charge on the partial annuitization of pension benefits.  On an adjusted basis, net income was $25.6 million, or $0.39 per diluted share. 

TRIUMPH's results included the following:  

The number of shares used in computing diluted earnings per share for the fourth quarter of 2022 was 65.4 million.

Adjusting for the pending Stuart divestiture, backlog, which represents the next 24 months of actual purchase orders with firm delivery dates or contract requirements, was $1.42 billion, up 6% from the prior year, primarily on commercial narrow body platforms. 

For the fourth quarter of fiscal 2022, cash flow provided by operations was $33.0 million.

The Company's outlook reflects adjustments detailed in the attached tables and assumes a first quarter of fiscal 2023 closure on our Stuart facility divestiture and the resolution of the related customer advances.

Based on anticipated aircraft production rates, the Company expects net sales for fiscal 2023 will be approximately $1.2 billion to $1.3 billion.

The Company expects GAAP fiscal 2023 earnings per diluted share of $0.40 to $0.60.

The Company expects fiscal 2023 cash used in operations of ($30.0) million to ($40.0) million, including core cash flow from operations of approximately $30.0 million to $45.0 million and core free cash flow of approximately break-even to $15.0 million. 

TRIUMPH will hold a conference call today, May 18th, at 8:30 a.m. (ET) to discuss the fourth quarter of fiscal 2022 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 May 18th to May 25th by calling (877) 344-7529 (Domestic) or (412) 317-0088 (International), passcode #5049523.

TRIUMPH, 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.

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, 2021.

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.

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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, loss on divestitures, share-based compensation expense, 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 25 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, share-based compensation 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.

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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.
• Non-service defined benefit income (inclusive of 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,
• Share-based compensation may be useful for investors to consider because it represents a portion of the total compensation to management and the board of directors. 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.

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The following table shows our Adjusted EBITDA and Adjusted EBITDAP reconciled to our net income for the indicated periods (in thousands):

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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.

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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.

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.

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Fiscal 2023 outlook includes cash used in operations, core cash from operations and core free cash flow. We use core cash from operations and core free cash flow to measure performance of our continuing operations. The following table reconciles cash used in operations to core cash flow from operations and core free cash flow.

^ Non-core cash use estimate includes remaining cash related to the exit or sale of legacy structures facilities and programs.

SOURCE Triumph Group