Triumph (TGI) - 2024 Q4 - Annual Results

Financial Performance Overview This section provides an overview of Triumph Group's financial performance, including fourth-quarter and full-year fiscal 2024 results, along with fiscal year 2025 guidance Fourth Quarter Fiscal 2024 Performance Triumph Group reported strong fourth-quarter results with net sales of $358.6 million, reflecting an 11% organic growth rate, a 12.5% operating margin, and $72.1 million in free cash flow Q4 Fiscal 2024 Key Financial Metrics | Metric | Value | | :--- | :--- | | Net Sales | $358.6 million | | Organic Sales Growth | 11% | | Operating Income | $44.8 million | | Operating Margin | 12.5% | | Adjusted Operating Margin | 15.6% | | Net Income from Continuing Operations | $5.5 million | | EPS from Continuing Operations (Diluted) | $0.07 | | Adjusted Net Income from Continuing Operations | $23.3 million | | Adjusted EPS from Continuing Operations (Diluted) | $0.31 | | Adjusted EBITDAP | $58.3 million | | Adjusted EBITDAP Margin | 16.3% | | Cash Provided by Operations | $77.7 million | | Free Cash Flow | $72.1 million | Full Year Fiscal 2024 Performance For the full fiscal year 2024, Triumph achieved net sales of $1.19 billion, marking a 13% organic sales growth, a 7.3% operating margin, and a net loss from continuing operations of ($34.5) million Full Year Fiscal 2024 Key Financial Metrics | Metric | Value | | :--- | :--- | | Net Sales | $1.19 billion | | Organic Sales Growth | 13% | | Operating Income | $86.5 million | | Operating Margin | 7.3% | | Adjusted Operating Margin | 9.6% | | Net Loss from Continuing Operations | ($34.5) million | | EPS from Continuing Operations | ($0.46) | | Adjusted Net Loss from Continuing Operations | ($4.4) million | | Adjusted EBITDAP | $144.3 million | | Adjusted EBITDAP Margin | 12.1% | | Cash Provided by Operations | $9.4 million | | Free Cash Use | ($12.4) million | Fiscal Year 2025 Guidance Triumph anticipates net sales of approximately $1.2 billion for fiscal 2025, with projected operating income of ~$140.0 million (12% margin) and free cash flow between $10.0 million and $25.0 million Fiscal Year 2025 Guidance | Metric | Guidance | | :--- | :--- | | Net Sales | ~$1.2 billion | | Operating Income | ~$140.0 million | | Operating Margin | ~12% | | Adjusted EBITDAP | ~$182.0 million | | Adjusted EBITDAP Margin | ~15% | | Earnings per Diluted Share | ~$0.42 | | Cash Flow from Operations | $30.0 million to $50.0 million | | Free Cash Flow | $10.0 million to $25.0 million | Management Commentary The CEO emphasized key strategic achievements in fiscal 2024, including streamlining the business through divestitures, significantly de-leveraging the balance sheet, and achieving eight consecutive quarters of organic growth - Completed the divestiture of the third-party Product Support MRO business and used the proceeds to retire over $550.0 million of debt, accelerating de-leveraging[6][7] - Achieved the eighth consecutive quarter of year-over-year organic growth, primarily driven by rapid growth in aftermarket volume[7] - Accelerated new business with a year-to-date book-to-bill rate of 1.28, increasing the backlog by 22% year-over-year to its highest level since March 2020[7] - The Interiors business profit and cash flow lagged due to external cost drivers, though these headwinds are expected to lessen as narrowbody aircraft rates recover[7] Detailed Financial Analysis This section provides an in-depth analysis of Triumph Group's revenue by market segment, profitability, earnings, backlog, and cash flow performance Revenue Analysis In Q4 FY2024, total net sales grew to $358.6 million from $325.5 million year-over-year, propelled by a strong recovery in the aftermarket that offset modest declines in OEM segments Net Sales by Market (in millions) | Segment | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | :--- | | Commercial OEM | $139.6 | $144.3 | $530.3 | $541.5 | | Military OEM | $71.2 | $80.2 | $261.9 | $261.1 | | Total OEM Revenue | $210.8 | $224.4 | $792.2 | $802.5 | | Commercial Aftermarket | $56.4 | $38.4 | $164.0 | $126.1 | | Military Aftermarket | $65.3 | $54.1 | $183.1 | $165.8 | | Total Aftermarket Revenue | $121.6 | $92.5 | $347.1 | $292.0 | | Total Net Sales | $358.6 | $325.5 | $1,192.0 | $1,130.6 | Commercial OEM Commercial OEM sales decreased by 3.3% in Q4, primarily due to a non-aviation revenue adjustment, partially offset by higher production volumes on the Boeing 787 program - Excluding divestitures and exited programs, Commercial OEM sales decreased by $1.5 million (1.1%) in Q4[9] Military OEM Military OEM sales fell 11.2% in the quarter, primarily due to reduced sales on military rotorcraft programs like the V-22, partly offset by increased volumes on other military programs - Military OEM sales decreased by $9.0 million (11.2%) in Q4, driven by lower sales on military rotorcraft like the V-22[11] Commercial Aftermarket Commercial Aftermarket sales experienced robust growth of 47.1% in Q4, driven by the ongoing recovery in global air travel, which boosted demand for spare parts and repair and overhaul services - Commercial Aftermarket sales increased by $18.0 million (47.1%) in Q4, driven by the continued improvement in air travel metrics[10] Military Aftermarket Military Aftermarket sales grew by a strong 20.7% in the quarter, primarily due to increased demand for spares and repairs related to military rotorcraft programs - Military Aftermarket sales increased by $11.2 million (20.7%) in Q4, mainly from increased spares and repairs for military rotorcraft[11] Profitability and Earnings In Q4 FY2024, GAAP operating income was $44.8 million, with net income from continuing operations at $5.5 million ($0.07 per share), adjusted to $23.3 million ($0.31 per share) due to one-time items Q4 FY2024 GAAP to Non-GAAP Reconciliation (in millions, except EPS) | Item | Pre-tax | After-tax | Diluted EPS | | :--- | :--- | :--- | :--- | | Income from Continuing Operations - GAAP | $9.2 | $5.5 | $0.07 | | Adjustments: | | | | | Legal contingencies loss | $6.0 | $6.0 | $0.08 | | Restructuring costs | $5.0 | $5.0 | $0.06 | | Debt extinguishment loss | $6.8 | $6.8 | $0.09 | | Adjusted income from continuing operations - non-GAAP | $27.0 | $23.3 | $0.31 | - Fourth quarter operating income of $44.8 million includes $5.0 million of restructuring costs and $6.0 million in legal contingencies loss[13] Backlog and Cash Flow The company's financial health improved, with the backlog growing 22% year-over-year to $1.9 billion, driven by commercial OEM platforms, and generating strong cash flow of $77.7 million from operations in the fourth quarter - Backlog, representing the next 24 months of firm orders, increased 22% from the prior fiscal year-end to $1.9 billion, primarily on commercial OEM platforms[14] - For the fourth quarter of fiscal 2024, cash flow provided by operations was $77.7 million[14] Unaudited Financial Statements This section presents Triumph Group's unaudited condensed statements of operations, balance sheets, and cash flows for fiscal year 2024 Condensed Statements of Operations For fiscal year 2024, Triumph reported net sales of $1.19 billion and operating income of $86.5 million, with a final net income of $512.4 million primarily due to income from discontinued operations FY 2024 vs FY 2023 Statement of Operations (in thousands) | Line Item | Year Ended March 31, 2024 | Year Ended March 31, 2023 | | :--- | :--- | :--- | | Net sales | $1,192,043 | $1,130,562 | | Operating income | $86,454 | $195,685 | | Income (loss) from continuing operations | ($34,467) | $72,417 | | Income from discontinued operations, net of tax | $546,851 | $17,176 | | Net income (loss) | $512,384 | $89,593 | | Diluted EPS - continuing operations | ($0.46) | $0.96 | | Diluted EPS - discontinued operations | $7.38 | $0.24 | | Diluted EPS - total | $6.92 | $1.20 | Balance Sheets As of March 31, 2024, Triumph's balance sheet reflects significant de-leveraging, with long-term debt reduced to $1.07 billion, cash increasing to $392.5 million, and stockholders' deficit improving dramatically Balance Sheet Highlights (in thousands) | Line Item | March 31, 2024 | March 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $392,511 | $227,403 | | Total assets | $1,686,270 | $1,714,844 | | Long-term debt, less current portion | $1,074,999 | $1,688,620 | | Total liabilities | $1,790,684 | $2,512,240 | | Total stockholders' deficit | ($104,414) | ($797,396) | Statements of Cash Flows For fiscal year 2024, Triumph generated $9.4 million in cash from operating activities, with investing activities providing $689.9 million from asset sales, and financing activities using $534.3 million for debt retirement Cash Flow Summary (in thousands) | Line Item | Fiscal Year Ended March 31, 2024 | Fiscal Year Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $9,443 | ($52,251) | | Net cash provided by (used in) investing activities | $689,925 | ($27,168) | | Net cash (used in) provided by financing activities | ($534,337) | $65,788 | | Net change in cash and cash equivalents | $165,108 | ($13,475) | Segment Performance This section analyzes the financial performance and key metrics for Triumph Group's Systems & Support and Interiors segments Systems & Support The Systems & Support segment demonstrated strong performance in fiscal 2024, with external sales rising to $1.03 billion, EBITDAP growing to $200.1 million, and the EBITDAP margin expanding to 19.5% Systems & Support Performance (in thousands) | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | :--- | | Net sales to external customer | $310,116 | $285,583 | $1,027,630 | $918,960 | | Segment EBITDAP | $71,336 | $64,134 | $200,074 | $172,415 | | Segment EBITDAP Margin | 23.1% | 22.5% | 19.5% | 18.8% | Interiors The Interiors segment faced significant challenges in fiscal 2024, with external sales declining to $164.4 million, resulting in an EBITDAP loss of ($5.0) million and a negative 3.0% margin Interiors Performance (in thousands) | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | :--- | | Net sales to external customer | $48,471 | $39,875 | $164,413 | $211,602 | | Segment EBITDAP | $1,137 | $3,047 | ($5,000) | $31,937 | | Segment EBITDAP Margin | 2.3% | 7.6% | -3.0% | 14.0% | Non-GAAP Financial Measures This section provides reconciliations of Triumph Group's key non-GAAP financial measures, including Adjusted EBITDAP, Adjusted Income from Continuing Operations, Adjusted Operating Income, and Free Cash Flow Reconciliation of Adjusted EBITDAP Triumph reconciles its GAAP income from continuing operations to Adjusted EBITDAP, which was $58.3 million (16.3% margin) for Q4 FY2024 and $144.3 million (12.1% margin) for the full fiscal year Reconciliation to Adjusted EBITDAP (in thousands) | Line Item | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | :--- | | Income (loss) from continuing operations | $5,461 | ($24,166) | ($34,467) | $72,417 | | Adjustments (Net) | $52,725 | $72,348 | $178,719 | $77,602 | | Adjusted EBITDAP | $58,274 | $54,243 | $144,254 | $150,019 | | Net Sales | $358,587 | $325,458 | $1,192,043 | $1,130,562 | | Adjusted EBITDAP Margin | 16.3% | 16.7% | 12.1% | 13.1% | Reconciliation of Adjusted Income from Continuing Operations The company provides a reconciliation from GAAP to non-GAAP adjusted income from continuing operations, with Q4 FY2024 adjusted income at $23.3 million ($0.31/share) and FY2024 adjusted loss at ($4.4) million (($0.06)/share) FY 2024 GAAP to Non-GAAP Income Reconciliation (in thousands, except EPS) | Period | GAAP Loss from Cont. Ops | Adjustments (Net) | Adjusted Income (Loss) | Adjusted EPS | | :--- | :--- | :--- | :--- | :--- | | Q4 2024 | $5,461 | $17,804 | $23,265 | $0.31 | | FY 2024 | ($34,467) | $30,115 | ($4,352) | ($0.06) | Reconciliation of Adjusted Operating Income Triumph reconciles GAAP operating income to an adjusted non-GAAP figure by excluding transformation-related expenses, resulting in Q4 FY2024 adjusted operating income of $55.8 million (15.6% margin) and FY2024 of $114.9 million (9.6% margin) Reconciliation to Adjusted Operating Income (in thousands) | Line Item | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | :--- | | Operating income - GAAP | $44,810 | $42,992 | $86,454 | $195,685 | | Adjustments (Net) | $10,985 | $3,738 | $28,421 | ($81,166) | | Adjusted operating income - non-GAAP | $55,795 | $46,730 | $114,875 | $114,519 | | Adjusted operating margin - non-GAAP | 15.6% | 14.4% | 9.6% | 10.0% | Reconciliation of Free Cash Flow Free cash flow is derived by subtracting capital expenditures from cash provided by operating activities, with Q4 FY2024 generating $72.1 million, FY2024 showing a ($12.4) million use, and FY2025 guidance projecting positive free cash flow Free Cash Flow Reconciliation (in millions) | Period | Cash from Ops | Capital Expenditures | Free Cash Flow (Use) | | :--- | :--- | :--- | :--- | | Q4 2024 | $77.7 | ($5.6) | $72.1 | | Q4 2023 | $60.0 | ($8.3) | $51.8 | | FY 2024 | $9.4 | ($21.8) | ($12.4) | | FY 2023 | ($52.3) | ($20.7) | ($72.9) | | FY 2025 Guidance | $30.0 - $50.0 | ($20.0) - ($25.0) | $10.0 - $25.0 |