TRIUMPH UPDATES FINANCIAL GUIDANCE FOR FULL YEAR FISCAL 2024

Rhea-AI Summary

Triumph Group, Inc. updates financial guidance for fiscal year 2024, reaffirming net sales of $1.17-1.20 billion, operating income of $100-110 million, and adjusted EBITDAP of $157-167 million. The company completed debt paydowns and asset sales, impacting cash flows and free cash use.

Positive

• Triumph Group, Inc. reaffirms its financial outlook for fiscal year 2024, with net sales expected to range from $1.17 billion to $1.20 billion.
• Operating income for the same period is projected to be between $100.0 million and $110.0 million, while adjusted EBITDAP is forecasted to be in the range of $157.0 million to $167.0 million.
• The company updated its cash flow projections, with cash flow used in operations expected to range from $(15.8) million to $(5.8) million, and free cash use anticipated to be between $(39.6) million and $(29.6) million.
• Triumph Group, Inc. recently completed debt paydowns and asset sales, affecting its balance sheet and cash flows. The company's updated financial guidance reflects these recent transactions and their impact on its operations.
• The company's balance sheet update includes the completion of debt repayments and asset sale tenders, totaling approximately $128.7 million and $1.2 million, respectively.
• Triumph Group, Inc. also posted unaudited preliminary quarterly results for continuing operations, highlighting the impact of discontinuing its Product Support business.

Negative

• None.

Financial Analyst

The recent financial update from Triumph Group, Inc. indicates a strategic divestiture and debt reduction, which can have substantial implications for the company's liquidity and leverage ratios. The call of senior secured notes and the settlement of an asset sale tender are pivotal moves to restructure the company's debt profile. This debt reduction is expected to decrease interest expenses, potentially improving net income and earnings per share in future periods. However, the updated guidance also suggests a significant use of cash in operations, which may raise questions about the company's operational efficiency and cash management strategies.

From a valuation perspective, the reaffirmation of net sales and operating income guidance suggests stability in the company's core operations, which could be perceived positively by the market. However, the adjustment in cash flow and free cash use guidance to negative figures might concern investors about the near-term cash requirements and the company's ability to fund its operations without additional financing. The implications of these financial maneuvers should be monitored closely in the upcoming quarters for their impact on the company's financial health and stock performance.

Market Research Analyst

Triumph Group's financial update reflects broader industry trends where companies are streamlining operations and shedding non-core assets to focus on profitability and debt management. The sale of the Product Support business could be seen as a strategic move to concentrate on more profitable segments. This aligns with the current market sentiment favoring leaner, more focused enterprises.

Investors and stakeholders may interpret the reaffirmed guidance as a signal of management's confidence in the company's strategic direction and operational targets. However, the negative cash flow guidance could be indicative of transitional costs and the expenses associated with restructuring. It is crucial to assess how these factors will play out against the backdrop of the aerospace and defense industry's cyclical nature and current economic conditions. The long-term success of this strategy will depend on the company's ability to capitalize on growth opportunities in its continuing operations and to manage the working capital effectively.

Debt Market Analyst

The call of senior secured notes and the settlement of an asset sale tender represent a proactive approach to debt management by Triumph Group. By repurchasing debt at a premium and at par, the company is likely trying to optimize its capital structure and reduce future interest obligations. This could be a strategic move to improve credit ratings and reduce the cost of capital, which can enhance shareholder value over time.

However, the impact on the debt markets could be mixed. Current debt holders might view the call of notes as a positive step towards financial stability, while potential investors could be wary of the negative cash flow guidance. The company's ability to manage its remaining debt obligations and to refinance at favorable rates in the future will be a critical factor for debt market stakeholders. The balance between debt reduction and maintaining sufficient liquidity to meet operational needs will be a delicate one that requires careful monitoring.

RADNOR, Pa. , March 8, 2024 /PRNewswire/ -- Triumph Group, Inc. (NYSE: TGI) ("TRIUMPH" or the "Company") announced today that it has updated its financial guidance for its full year fiscal 2024, which ends March 31, 2024, in conjunction with the recent closing on the sale of its former Product Support business and the related expected paydowns of its debt.

The updated cash guidance includes the cash flows from the Product Support business through February 29, 2024, as well as reflects certain cash outflows related to the transaction, including transaction fees and taxes, the timing of interest and accelerated employee related obligations of the divested operations, which are expected to be paid in March 2024, along with modest working capital timing impacts on the continuing operations.

Full Year Fiscal 2024 Guidance

• Reaffirming net sales of $1.17 billion to $1.20 billion
• Reaffirming operating income of $100.0 million to $110.0 million
• Reaffirming adjusted EBITDAP of $157.0 million to $167.0 million
• Updating cash flow used in operations to a range of $(15.8) million to $(5.8) million
• Updating free cash use to a range of $(39.6) million to $(29.6) million

Implied Fourth Quarter Fiscal 2024 Guidance

• Net sales of $336.5 million to $366.5 million, consistent with prior implied guidance
• Operating income of $58.4 million to $68.4 million, consistent with prior implied guidance
• Adjusted EBITDAP of $71.0 million to $81.0 million, consistent with prior implied guidance
• Updating cash flow from operations to a range of $52.5 million to $62.5 million
• Updating free cash flow to a range of $45.0 million to $55.0 million

Balance Sheet Update

• On March 4, 2024, completed the call of $120.0 million of its Senior Secured Notes due 2028 at 103%, plus accrued but unpaid interest for approximately $128.7 million
• On March 5, 2024, settled the asset sale tender of $1.1 million of its Senior Secured Notes due 2028 at par, plus accrued but unpaid interest for approximately $1.2 million
• On March 6, 2024, completed the call of the remaining $435.6 million of Senior Notes due 2025 at par, plus accrued but unpaid interest for approximately $437.6 million

In addition, a presentation including unaudited preliminary quarterly results for continuing operations reflecting Product Support as discontinued operations is posted on the Company's website at https://www.triumphgroup.com/filings-financial/presentations. 

		Implied fourth quarter
		Fiscal 2024		Fiscal 2024
($ in millions)		Guidance		Guidance
Operating Income		$58.4 - $68.4		$100.0 - $110.0
Adjustments:
Loss on sale of assets and businesses		--		$12.2
Shareholder cooperation expenses		--		$1.9
Legal judgment loss		--		$1.3
Other adjustments		$1.9		$1.9
Depreciation & Amortization		$8.7		$30.8
Amortization of acquired contract liabilities		($1.0)		($2.9)
Share-based compensation		$3.0		$11.7
Adjusted EBITDAP - non-GAAP*		$71.0 - $81.0		$157.0 - $167.0
* Differences due to rounding

		Implied Fourth Quarter Fiscal 2024 Guidance		Fiscal 2024 Guidance
$ in millions
Cash provided by (used in) operating activities		$ 52.5 - $ 62.5		$(15.8) - $(5.8)
Less:
Capital expenditures		$ (7.5)		$ (23.8)
Free cash flow (use)*		$ 45.0 - $ 55.0		$(39.6) - $(29.6)
* Differences due to rounding

About TRIUMPH 

TRIUMPH, headquartered in Radnor, Pennsylvania, designs, develops, manufactures, repairs and overhauls a broad portfolio of aerospace and defense systems and components. 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 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, 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," "guidance," "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 increase the Company's profitability and growth, adequately deleverage its business, strengthen its balance sheet, adequately manage its cash flows and expenses, and win new business; and risks related to the unaudited preliminary pro forma results, which are subject to change. 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

What is Triumph Group, Inc.'s net sales guidance for fiscal year 2024?

Triumph Group, Inc. reaffirms its net sales guidance for fiscal year 2024 to be in the range of $1.17 billion to $1.20 billion.

What is the operating income projection for Triumph Group, Inc. in fiscal year 2024?

Triumph Group, Inc. projects its operating income for fiscal year 2024 to be between $100.0 million and $110.0 million.

What is the adjusted EBITDAP range for Triumph Group, Inc. in fiscal year 2024?

Triumph Group, Inc. anticipates its adjusted EBITDAP to be in the range of $157.0 million to $167.0 million for fiscal year 2024.

What is the updated cash flow range used in operations for Triumph Group, Inc. in fiscal year 2024?

Triumph Group, Inc. has updated its cash flow used in operations to a range of $(15.8) million to $(5.8) million for fiscal year 2024.

What is Triumph Group, Inc.'s free cash use range for fiscal year 2024?

Triumph Group, Inc. expects its free cash use to be in the range of $(39.6) million to $(29.6) million for fiscal year 2024.

Did Triumph Group, Inc. recently complete any debt paydowns?

Yes, Triumph Group, Inc. completed debt paydowns, including the call of $120.0 million of its Senior Secured Notes due 2028 at 103%.

Where can I find Triumph Group, Inc.'s unaudited preliminary quarterly results?

Triumph Group, Inc.'s unaudited preliminary quarterly results for continuing operations are available on the Company's website at https://www.triumphgroup.com/filings-financial/presentations.