Triumph Group Inc (TGI) Q1 2025 Earnings Call Highlights: Strong Aftermarket Growth and ...

GuruFocus News
4 min read

In This Article:

  • Revenue: $281 million, up 7% year-over-year.

  • Adjusted Operating Income: $17 million, up 23% year-over-year.

  • Adjusted Operating Margin: 6%, up 80 basis points from last year.

  • Adjusted EBITDAP: $25 million, representing a 9% margin.

  • Aftermarket Revenue: 33% of total revenue, up from 27% last year.

  • Commercial Aftermarket Revenue: Up 43%, driven by legacy 737 spares and repairs.

  • Military Aftermarket Revenue: $41 million, up 11% year-over-year.

  • Free Cash Use: $113 million, driven by working capital build and other factors.

  • Net Debt: $821 million, with liquidity totaling $203 million.

  • Debt Reduction: Redeemed $120 million of first lien notes.

  • Annual Interest Savings: $55 million from debt reduction.

  • Backlog: Up 11% year-over-year to $1.9 billion.

  • FY25 Guidance: Net sales of approximately $1.2 billion, EBITDAP of $182 million, and free cash flow of $10 million to $25 million.

Release Date: August 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Triumph Group Inc (NYSE:TGI) reported a 7% year-over-year sales growth, driven by strong aftermarket demand.

  • The company expanded its margins through price increases and a favorable sales mix.

  • Triumph Group Inc (NYSE:TGI) retired an additional $120 million of debt, strengthening its balance sheet.

  • The company received credit rating upgrades from both Moody's and S&P.

  • Aftermarket sales were up 27% year over year, benefiting from a rising average fleet age and the 787 landing gear overhaul cycle.

Negative Points

  • Military OEM production demand saw a modest reduction, impacting overall military segment revenues.

  • The interiors business continues to face challenges due to inflationary impacts and supply chain cost increases.

  • Triumph Group Inc (NYSE:TGI) experienced a legal contingency loss of $7.5 million related to a legacy environmental matter.

  • The company faced supply chain challenges, particularly affecting the V-22 program and LEAP order deferrals.

  • Free cash use in the first quarter was $113 million, driven by seasonally higher working capital and timing of OEM rate ramps.

Q & A Highlights

Q: Can you explain the expected positive swing in free cash flow in the second half of the year? Is it related to the 787 work or the aftermarket? What rate do you expect for the 737 MAX? A: The positive swing is due to strong performance from our actuation and engine controls businesses, independent of the MAX. Our geared solutions business will benefit from new programs like the T-7A in the second half. The interiors business is currently down, but we expect an upswing in volume by Q4 as the MAX rate comes back. Overall, it's a mix of MRO, military, and commercial coming back strong in the second half. (Daniel Crowley, CEO; James McCabe, CFO)

Recommended Stories