TRIUMPH ANNOUNCES SALE OF PRODUCT SUPPORT BUSINESS TO AAR
- The agreement will strengthen Triumph's balance sheet and focus the company on its OEM and IP-based aftermarket business, increasing its capacity to win and profitably grow in expanding markets.
- The deal is valued at a 14.5x trailing 12 months Adjusted EBITDAP multiple, indicating a significant financial benefit for Triumph.
- The transaction is expected to result in pro forma net leverage of approximately 4.0x net debt to Adjusted EBITDAP as of March 2024, showing a positive impact on Triumph's financial position.
- None.
The sale of Triumph Group's Product Support business to AAR CORP. for $725 million is a strategic move with significant financial implications. The 14.5x trailing 12 months Adjusted EBITDAP multiple indicates a premium valuation for this segment, suggesting strong operational performance and potential for future growth. Adjusted EBITDAP, a modification of EBITDA, includes provisions, restructuring and other non-recurring items, providing a clearer picture of ongoing business performance.
The transaction's primary aim to reduce debt is a positive signal to investors concerned with Triumph's financial leverage. The expected pro forma net leverage of approximately 4.0x net debt to Adjusted EBITDAP demonstrates a commitment to improving the company's financial health, which could lead to an improved credit rating and reduced interest costs over time.
Triumph's decision to focus on its OEM and IP-based aftermarket business aligns with industry trends emphasizing specialized, high-margin segments. The MRO sector is highly competitive and the divestiture allows Triumph to concentrate resources on areas where it can leverage its intellectual property to differentiate itself from competitors. Over 60% of the company's offerings will be IP-based post-transaction, enhancing its potential for proprietary product offerings and customer lock-in, which is a strong competitive advantage in the aerospace industry.
The involvement of Goldman Sachs as a financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP as legal counsel indicates a well-structured and strategic approach to the transaction. The deal is subject to customary closing conditions and regulatory approvals, which are standard in such transactions. The successful navigation of these legal and regulatory hurdles will be critical for the timely completion of the deal, expected in the first quarter of the 2024 calendar year. The legal expertise ensures that the transaction adheres to regulatory requirements and minimizes risks associated with the transfer of business operations.
TRANSACTION EXPECTED TO MEANINGFULLY STRENGTHEN
The Product Support business is an industry leader in the Maintenance, Repair and Overhaul (MRO) of structures and airframe and engine accessories, servicing both the commercial and military aftermarkets across five primary locations. The business generated revenues of approximately
"We are pleased to enter into this transformative agreement which recognizes the strength of our MRO business and delivers immediate and substantial value to
Upon completion of the transaction,
The transaction is expected to close in the first quarter of the 2024 calendar year, subject to customary closing conditions, including receipt of certain regulatory approvals. The Company intends to update its outlook during
Goldman Sachs is acting as financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel on the transaction to
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About AAR
AAR is a global aerospace and defense aftermarket solutions company with operations in over 20 countries. Headquartered in the
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, operational efficiencies and organizational restructurings and our evaluation of potential adjustments to reported amounts, as described above. Forward-looking statements may also be identified because they contain words such as "anticipate," "believe," "continue," "could,'' "estimate," "expect," "intend," "may," "might," "plan," "project," "seek," "should," "target," "will," or similar expressions and the negatives of those terms. 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. Such risks and uncertainties include, without limitation: the inability to consummate the proposed transaction within the anticipated time period, or at all; the risk that the proposed transaction disrupts the Company's current plans and operations or diverts management's attention from its ongoing business; and the amount of costs, fees and expenses related to the proposed transaction. 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, 2023.
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SOURCE Triumph Group
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