Triumph Group Inc.’s TGI adjusted earnings from continuing operations for first-quarter fiscal 2016 ended Jun 30, 2015 came in at $1.31 per share, lagging the Zacks Consensus Estimate of $1.33 by 1.5%. However, earnings increased 10.1% from $1.19 a year ago.
On a GAAP basis, the company reported earnings of $1.27 per share compared with $2.46 per share in the prior-year quarter. The difference in reported and adjusted earnings was due to an approximate $2.9 million pre-tax charge (4 cents per share) related to an amendment to the Triumph Aerostructures pension plan included in the recently ratified United Automobile Workers collective bargaining agreement.
Total Revenue
In the reported quarter, net sales were $959.6 million, surpassing the Zacks Consensus Estimate of $954 million by 3.4%. The top line improved 7% year over year.
Despite the year-over-year increase, the top line was tempered by a 10% drop in organic sales, which was primarily due to production rate reductions on key Aerostructures programs.
Operational Highlights
In first-quarter fiscal 2016, the company reported operating income of $107.9 million compared with $240.5 million in the prior-year quarter.
Segment Performance
Aerostructures: Segment sales were $611.8 million, almost flat compared with $612.2 million in the year-ago quarter. Organic sales were down 14% primarily due to lower production of the C-17, 747-8, A330 and G450/G550 programs. Operating income declined 4.1% to $66 million from $68.8 million in the year-ago quarter.
Aerospace Systems: Segment sales surged 26.2% year over year to $277.6 million. Organic sales for the quarter decreased 3% mainly due to order timing on certain military programs and slower commercial rotorcraft demand. Operating income was $51.3 million, up 37.2% year over year from the prior-year level of $37.4 million.
Aftermarket Services: Segment revenues rose 10.5% to $74.7 million in the reported quarter. Organic sales for the quarter were flat compared with prior year. Operating income was $10.0 million, down 4.8% from $10.5 million in first-quarter fiscal 2015.
Financial Position
As of Jun 30, 2015, Triumph’s cash balance was $39.7 million compared with $32.6 million as of Mar 31, 2015. As of Jun 30, 2015, long-term debt (excluding current portion) stood at $1,505.7 million compared with $1,326.3 million as of Mar 31, 2015.
Cash outflow from operations, after pension contributions, during the quarter was $148.5 million compared with $52.1 million in the year-ago quarter. The company spent $18.0 million as capital expenditure in the quarter compared with $23.1 million in the comparable period last year.
Guidance
For fiscal 2016, the company expects revenues in the range of $3.9 to $4.0 billion; and earnings per share, excluding the first-quarter curtailment charge, between $5.50 and $5.75 per share.
Cash available for debt reduction, acquisitions and share repurchases for fiscal 2016 is expected in the range of $125–$150 million.
Zacks Rank
Currently, Triumph carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the aerospace/defense industry include Ducommun Inc. DCO, sporting a Zacks Rank #1 (Strong Buy); and Aerojet Rocketdyne Holdings, Inc. AJRD and Kratos Defense & Security Solutions, Inc. KTOS, both holding a Zacks Rank #2 (Buy).
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