Investor Overview February 2020 · military aircraft for OEMs and operators ... Source: 2019 Oliver...

Investor Overview

February 2020

2TRIUMPH GROUP / INVESTOR OVERVIEW / FEBRUARY 2020

Forward Looking Statements

This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking

statements are often, but not always, identified by the use of words such as “anticipate”, “believe”, “expect”, “plan”, “intend”, “project”, “may”, “will”,

“should”, “could”, or similar words suggesting future outcomes or outlooks. These forward-looking statements include, but are not limited to,

statements of expectations of or assumptions about strategic actions, objectives, expectations, intentions, aerospace market conditions, aircraft

production rates, financial and operational performance, revenue and earnings growth and profitability and earnings results. These statements are

based on the current projections, expectations and beliefs of Triumph’s management. These forward looking statements involve known and unknown

risks, uncertainties and other factors which could cause actual results to differ materially from any expected future results, performance or

achievements, including, but not limited to, competitive and cyclical factors relating to the aerospace industry, dependence on some of Triumph’s

business from key customers, requirements of capital, uncertainties relating to the integration of acquired businesses, general economic conditions

affecting Triumph’s business segments, product liabilities in excess of insurance, technological developments, limited availability of raw materials or

skilled personnel, changes in governmental regulation and oversight and international hostilities and terrorism. Further information regarding the

important factors that could cause actual results, performance or achievements to differ from those expressed in any forward looking statements can

be found in Triumph’s reports filed with the SEC, including in the risk factors described in Triumph’s Annual Report on Form 10-K for the fiscal year

ended March 31, 2019.


Company Overview

Global leader in manufacturing aircraft systems and components, repair and overhaul, and aerospace structures. Three operating segments:

• Integrated Systems

• Product Support

• Aerospace Structures

Market cap as of 5/10/19: $1.120B

Shares outstanding: 49.8M

FY’19 revenues: $3.4B

FY’19 adjusted EPS: $2.49

Backlog as of 3/31/19: $3.8B

Our wide variety of capabilities and products helps our customers triumph over the most complex challenges in response to evolving industry requirements.

NYSE:TGI

Headquarters: Berwyn, PA

Incorporated: 1993

Fiscal year ending: March 31


FY19 Revenue

Consolidated Highlights

Integrated

Systems

~$1.0B

ProductSupport

~$284M

Aerospace Structures

~$2.1B*

Commercial, 53%Military, 20%

Business, 23%

Regional, 2%Non-Aviation, 2%

Sales by Market (FY19) $3.4B

Integrated Systems, 67%

Aerospace Structures, 14%

Product Support, 18%

Adjusted Operating Income (FY19)$166M

Business Unit Summary

* Includes Interiors Business ~$320M in FY19 Sales

Integrated Systems and Product Support will be reported on combined basis as Systems & Support beginning March 2020


Investment Considerations

Portfolio transformation of Triumph is largely complete, and positive financial results will follow in this fiscal year.

Broad range of design and manufacturing capabilities for next generation commercial aircraft products and mission critical military applications

Well positioned on large volume mature platforms, new build derivatives and high growth military development programs

Sole source supplier on numerous aircraft platforms

Poised for growth in high margin Integrated Systems and Product Support segments

Improved balance sheet strength and liquidity provide financial flexibility to fund future growth


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Overview of key programs Revenue breakdown (FY19)Program Key products

Boeing 787• Landing gear extend / retreat system

• Longerons, stringers, shear ties, frame assemblies

Boeing 767 / Tanker

• Landing gear, actuators and cowl opening systems

• Tail section, wing center section

• Keel beams, acoustic panels, various nacelle components

• Aft body fuselage panels

Boeing 737

• Hydraulic valves and actuators

• Mechanical system components

• Engine gearboxes

G500 / 600 / 650

• Wings

• Wing stringers and spars

• Horizontal stabilizer

A320

• Hydraulic valves and actuators, power transfer units

• Sharklet wing reinforcement kits

• Engine gearboxes

V-22 Osprey

• Pylon conversion actuators

• Nose wheel steering

• Empennage

• Ramp and ramp door

• Side panels, sponsons and landing gear doors

A330, A340• Landing gear valves

• Wing components

A350 • Thermal Insulation Systems and Rudder Components

Boeing 777 • Inboard/Outboard Flaps, Ailerons and Spoilers

F-35 • Engine mounts, bulkheads, longerons and wing ribs


61%

Integrated Systems

31%

Product Support

8%

By segment

Note: Segment breakdown excludes elimination of intersegment sales

Diverse content on Key Programs

Well positioned on large volume, ramping, new derivatives and high growth military platforms


Integrated Systems

Superior design, development and support of

proprietary components and systems as well as

production of complex assemblies using external designs



Integrated Systems

Integrated solutions, including design, development, and support of components, systems and sub-systems

• Boeing

• GE

• Airbus

• Rolls Royce

Products & Services Major CustomersBusiness Overview

$1.0B Revenue (FY19)

17 Locations

Commercial, 52%

Military, 36%

Business, 6%Regional, 3% Non-Aviation, 3%

Sales by Market

Overview

Capabilities

Actuation& Controls

GearSystems

Mechanical Solutions

Electronics & Controls

Fluid Power & Actuation

Excludes Intercompany Sales and Contract Liability Amortization



Product Support

Superior lifecycle solutions for commercial, regional and

military aircraft for OEMs and operators



Product Support

Provides total life cycle solutions for commercial, regional and military aircraft. Offerings include full post-delivery value chain services that simplify the MRO supply chain

• L3

• Boeing

• GE

• Delta


$284M Revenue (FY’19)

6 Locations

Overview

Capabilities

Structural Component Repair

Interior Refurbishment

Accessory Component Repair

Commercial, 78%

Military, 16%Business, 1%

Regional, 5%Sales by Market





Extensive capabilities to engineer complex composite

aerostructures



TAS provides fully integrated, turn-key composite and metallic major assemblies, and interior system solutions employing the latest product development and manufacturing tools, processes and software to its diverse portfolio of commercial and military customers.

• Boeing

• Gulfstream

• Airbus

• Northrup Grumman


$2.1B Revenue (FY’19)

15 Locations*

Overview

Capabilities

FuselageNacelle

ProductsEmpennage

Commercial, 50%

Military, 12%

Business, 35%

Regional, 2% Other, 1%

Sales by Market

Fuselage

Panels

Insulation

BlanketsDucting CompositesAircraft

Wings

* After December 2019 divestiture of Nashville business



Quality of Backlog

Highlights

• Divested low-margin Build-to-Print businesses

• Transitioning development and underperforming programs

• Sunsetting programs continue to decline

• Military growth has enhanced stability

• Rate reductions impacting average margin programs

• Margins increased 560 bps over 12 month period

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16.8%

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Backlog & Margin Trend

Margins enhanced by improving quality of overall backlog

Margins presented equal gross margin after depreciation on a trailing 12-month basis


Top Programs in Backlog

Integrated Systems Aerospace Structures

Boeing 737

Airbus A320, A321

Boeing 787

Boeing V-22

Boeing AH-64

Boeing CH-47

Sikorsky UH60

Boeing F-18

Lockheed Martin C-130

Sikorsky CH-53

Represents 56% of

Integrated Systems backlog

Boeing 767, Tanker

Gulfstream G650

Boeing 787

Boeing 747

Boeing 737

Boeing 777

Airbus A350

NG Global Hawk

Boeing V-22

Gulfstream G550

Represents 83% of

Aerospace Structures backlog


The Path to a Stronger Triumph…

REVENUEGROWTH

FY2019Mar As Rptd

~4%

$2.8BTGI ANNUAL

REVENUE*~ 7%

FY2019PF Mar *

TIS/TPS ~ 5%

~61% ~ 55%

Shrink to grow in core businesses

~ 4%

CONTRACT MANUFACTURING %

Adj. EBITDAP MARGIN

Path to Value Actions

Shift toward higher IP and aftermarket

product offerings

Leaner model; increased profits

Increased; profitable backlog~(16%)BACKLOGGROWTH

* Proforma represents divestitures completed as of 4/1/18 FY19. See appendix for details.

TAS ~ 6%

TIS/TPS ~ 6%

TAS ~ (3%)

AEROSPACE STRUCTURES

$1.5B PF FY19 Sales ~5% FY19 EBITDAP Margin FY21 ~10% EBITDAP Margin

• Composite Components

• Interiors

• Military Structures

• Commercial Structures

PRODUCT SUPPORT

$0.3B PF FY19 Sales~18% FY19 EBITDAP MarginFY21 ~21% EBITDAP Margin

• Accessory Component Repair

• Interior Refurbishment

• Structural ComponentRepair

• Fuel System Services

INTEGRATED SYSTEMS

$1.0B PF FY19 Sales ~15% FY19 EBITDAP MarginFY21 ~19% EBITDAP Margin

• Electro-Mechanical Actuation

• Fluid Power

• Mechanical Actuation

• Fuel Systems

• Gear Systems


…Focused on our Core

REVENUEGROWTH

FY2019PF Mar *

~7%

$1.6BTGI ANNUAL

REVENUE*~10%

INTERIORSYSTEMS

$0.3B PF FY19 Sales ~15% EBITDAP FY19 Margin FY21 ~15% EBITDAP Margin

• Insulation Blankets

• Ducting

• Floor Panels

• Composite Interior Components

PRODUCT SUPPORT

$0.3B PF FY19 Sales~18% FY19 EBITDAP MarginFY21 ~21% EBITDAP Margin

• Accessory Component Repair

• Interior Refurbishment

• Structural ComponentRepair

• Fuel System Services

FY2019 CorePF Mar *

INTEGRATED SYSTEMS

$1.0B PF FY19 Sales ~15% FY19 EBITDAP MarginFY21 ~19% EBITDAP Margin

• Electro-Mechanical Actuation

• Fluid Power

• Mechanical Actuation

• Fuel Systems

• Gear Systems

TIS/TPS ~ 6%

~55% ~43%

~5%

CONTRACT MANUFACTURING %

Adj. EBITDAP MARGIN

Aerospace Structures Strategic Alternatives

Review

~4%BACKLOGGROWTH

* Proforma represents divestitures completed as of 4/1/18 FY19. Proforma core represents Integrated Systems, Product Support and Interiors businesses.. See appendix for details.

TAS ~ (3%)CORE ~ 6%


Source: 2019 Oliver Wyman Global Fleet MRO Market Forecast

Total MRO Spend by Region: 2019 - 2029

TIS TPS PN

MRO Sites

Triumph MRO Coverage

Well-positioned to support robust global MRO demand

PN= Partnerships


Source: 2019 Oliver Wyman Global Fleet MRO Market Forecast

TGI MRO Focused on Components Segment

Triumph’s proprietary component portfolio well matched with market demand

• Gearboxes• Fuel & Hydraulic pumps, power packs, & RATs• Nose wheel steering• Power transfer units• Actuation & uplocks• Flight control surfaces

• Heat exchangers• Air & Vapor cycle machines• Thrust reversers• Inlets, nacelles• Hydraulic fuses, accumulators,

and control valves

• FADEC units• Generators• Fuel metering units• Winglets• Interior components• Insulation


Aftermarket Cross-Selling Strategy

Collaborating across business units to grow aftermarket

OEM Spare End Item Sales

OEM Spare Piece Part Sales

OEM Test, Repair &

Overhaul Services

Third-Party Test, Repair &

Overhaul Services

Triumph Integrated Systems Triumph Product Support

Repair Management Services

Platform OEMs Distributors Airlines &

Operators

Innovative Support Solutions

Military Engine / System

OEMs

Customers Actions:

− Assess leakage

− Upgrade talent

− Export Best Practices between businesses

− Engage TPS sales team

− Enhance customer support & responsiveness

− Go to Market as one TGI MRO team (1-833-FLY-WTGI)

− Create one face to the customer

− Continued execution of strategic partnership efforts to drive global reach


Consolidated Quarterly Results

($ in millions) FY’20 Q3 FY’19 Q3

Net Sales $705 $808

Operating Profit/(Loss) 2 (17)

Operating Margin 0% (2)%

Adjusted Operating Income* $64 $38

Adjusted Operating Margin 9% 5%

Organic sales increase of 8%

− Increase across all business units

FY’20 Q3 Adjusted operating income excludes:

− $1M union OPEB-related incentives

− $(4M) legal settlement gain

− $60M loss on sale of assets and businesses

− $5M restructuring costs

FY’19 Q3 Adjusted operating income excludes:

− $52M forward loss charges

− $2M restructuring costs

Diversified product offering and improved execution enhanced operating results

*See Appendix for Non-GAAP reconciliation


Free Cash Flow Walk

Cash Drivers

Restructuring used $5M in Q3

Q3 FY’20 Net working capital growth of $11M includes:

− $20M advance liquidations

− $10M use on G280

See Appendix for reconciliation of cash used in operations to free cash use

Consolidated ($ in millions)FY’20 Q3

Triumph shifted from cash use to cash generation

Net Loss $ (14)

Non-cash items:

Depreciation & Amortization 30

Interest Expense & Other 33

Amortization of Acquired Contracts (17)

Loss on divestiture 60

Pension & OBEB (Income)/ Expense (14)

Share-based Expense 3

Income Tax Benefit (4)

Cash uses:

Working Capital Change (11)

Interest Payments (12)

Capital Expenditures (10)

OPEB Payments (2)

Tax Payments, net (2)

Free Cash Flow $ 40


Net Debt & Liquidity

($ in millions) FY’20 Q3

Strong liquidity, extended maturities timing and covenant compliant

Cash $ (54)

$639M Revolving Credit Facility --

$75M Receivable Securitization Facility 75

Capital Leases 26

2014 Senior Notes Due 2022 300



Net Debt $ 1,372

Cash and Availability ~ $635M

Senior Secured Leverage Ratio ~1.9x vs. 3.50x

First Lien Leverage Ratio ~0.4x vs. 2.50x

Interest Coverage Ratio ~3.4x vs. 2.75x


FY’20 Guidance

*Represents the normalized tax rate of 21%, adjusted for anticipated reduction through partial release of the valuation allowance

Business focused on core growth, improved margins and FCF generation

TGI Guidance Prior Guidance

Revenue $2.8B – $2.9B $2.8B – $2.9B

GAAP EPS $1.28 – $1.48 $1.34 – $2.35

Adjusted EPS $2.35 - $2.55 $2.35 – $2.95

FCF $0M – $50M $0M – $50M

Capex $40M -$50M $50M – $60M

Effective Tax Rate* ~10% ~21%


FY’20 Cash Flow Guidance

Achievement of positive cash flow reflects progress in turnaround

See Appendix for reconciliation of cash used in operations to free cash use

TGI Guidance Prior Guidance

Cash from operations $40M – $100M $50M – $110M

Capex $40M – $50M $50M – $60M

FCF $0M – $50M $0M – $50M

Advance Liquidations ($60M) ($80M)


Concluding Remarks

• Delivered strong Q3 results

• Maintain positive Free Cash Flow guidance in FY’20

• Transformation positions Triumph for profitable growth


Our Vision

We aspire to be the premier design, manufacturing and support company whose comprehensive capabilities, integrated processes and innovative employees advance the safety and prosperity of the world.

Our Mission

As One Team, we partner with our customers to triumph over the hardest aerospace, defense and industrial challenges, enabling us to deliver value to our shareholders.

Our Values

Integrity

Continuous Improvement

Teamwork

Innovation

Act with Velocity


Appendix


Supplemental Data

Pension/OPEB Analysis ($ in millions) FY’20 FY’19

Pension Expense (Income) ^ ≈ ($43) ≈ ($51)

Cash Pension Contribution ≈ $2 ≈ $5

OPEB Expense (Income) ^ ≈ ($10) ≈ ($10)

Cash OPEB Contribution ≈ $15 ≈ $12

^ Excludes impact from one-time adjustments such as curtailments, settlements or special termination benefits.


Non-GAAP Disclosure

Non-GAAP Financial Measure Disclosures (continued)

Adjusted income from continuing operations, before income taxes, adjusted income from continuing operations and adjusted income from continuing operations per diluted share, before non-recurring costs have been provided for consistency and comparability. These measures should not be considered in isolation or as alternatives to income from continuing operations before income taxes, income from continuing operations and income from continuing operations per diluted share presented in accordance with GAAP. The following tables reconcile income from continuing operations before income taxes, income from continuing operations, and income from continuing operations per diluted share, before non-recurring costs.

Three Months Ended

December 31, 2019

Pre-Tax After-Tax Diluted EPS

Loss from continuing operations - GAAP $ (17,528 ) $ (13,846 ) $ (0.27 )

Adjustments:

Loss on sale of assets and businesses, net 60,019 47,415 0.93

Legal judgment gain, net of expenses (3,857 ) (3,047 ) (0.06 )

Union incentives 1,400 1,106 0.02

Restructuring costs 4,744 3,748 0.07

Adjusted income from continuing operations - non-GAAP $ 44,778 $ 35,376 $ 0.69

Nine Months Ended

December 31, 2019

Pre-Tax After-Tax Diluted EPS

FY20 EPS

Guidance Range

Income from continuing operations - GAAP $ 59,420 $ 46,943 $ 0.93 $1.28 - $1.48

Adjustments:

Loss on sale of assets and businesses, net 55,190 43,600 0.86 1.07

Curtailment gain & special termination gain, net (14,373 ) (11,355 ) (0.22 ) (0.28 )

Legal settlement gain, net of expenses (9,257 ) (7,313 ) (0.14 ) (0.18 )

Union incentives 7,071 5,586 0.11 0.14

Restructuring costs 13,490 10,657 0.21 0.26

Refinancing cost 3,030 2,394 0.05 0.06

Adjusted income from continuing operations - non-GAAP* $ 114,571 $ 90,512 $ 1.79 $2.35 - $2.55 * Differences due to rounding


Non-GAAP Disclosure


Adjusted Operating Income is defined as GAAP Operating Income, less expenses/gains associated with the Company's

transformation, such as restructuring expenses, gains/losses on divestitures, defin ed benefit plan gains/losses from curtailments,

settlements, etc; impairments of goodwill and other assets. Management believes that this is useful in evaluating operating

performance, but this measure should not be used in isolation. The following table r econciles our Operating income to Adjusted

Operating income as noted above.

Three Months Ended Nine Months Ended

December 31,

2019

December 31,

2018

December 31,

2019

December 31,

2018

Operating income (loss) - GAAP $ 1,661 $ (16,933 ) $ 98,209 $ (85,482 )

Adjustments:

Adoption of ASU 2017-07 — — — 87,241

Loss on sale of assets and businesses, net 60,019 — 55,190 17,837

Global 7500 forward loss charge — 40,498 — 60,424

E2 Jet program forward loss charge — 9,162 — 9,162

G280 program forward loss charge — 2,516 — 2,516

Reduction of prior Gulfstream forward loss — — — (7,624 )

Restructuring costs 4,744 2,327 13,490 18,206

Legal judgment gain, net of expenses (3,857 ) — (9,257 ) —

Union incentives 1,400 — 7,071 —

Adjusted operating income - non-GAAP $ 63,967 $ 37,570 $ 164,703 $ 102,280


Non-GAAP Disclosure


(dollars in thousands)

FINANCIAL DATA (UNAUDITED)

TRIUMPH GROUP, INC. AND SUBSIDIARIES

Cash provided by operations, is provided for consistency and comparability. We also use free cash flow as a key factor in

planning for and consideration of strategic acquisitions and the repayment of debt. This measure should not be considered in

isolation, as a measure of residual cash flow available for discretionary purposes, or as an alternative to operating results

presented in accordance with GAAP. The following table reconciles cash provided by operations to free cash flow.

Three Months Ended

December 31,

Nine Months Ended

December 31,

2019 2018 2019 2018

Cash flow (provided by) used in operations $ 49,881 $ 4,063 $ 39,288 $ (193,116 )

Less:

Capital expenditures (10,255 ) (10,570 ) (27,250 ) (34,824 )

Free cash flow (use) $ 39,626 $ (6,507 ) $ 12,038 $ (227,940 )

The Company provides cash flow guidance on non -GAAP basis adjusting capital expenditures from cash from operations to

arrive at free cash flow. The following table reconciles cash from operations on a GAAP basis to free cash flow guidance.

FY20 Cash Flow

Guidance Range

Cash flow from operations $40,000 - $100,000

Less:

Capital expenditures $40,000 - $50,000

Free cash flow $0 - $50,000


Non-GAAP Disclosure

The following includes a discussion of our consolidated and business segment results of operations. The Company’s diverse structure and customer base do not allow for precise comparisons of the impact of price and volume changes to our results. However, we have disclosed the significant variances between the respective periods.

Non-GAAP Financial MeasuresWe prepare and publicly release quarterly unaudited financial statements prepared in accordance with U.S. GAAP. In accordance with Securities and Exchange Commission (the "SEC") guidance on Compliance and Disclosure Interpretations, we also disclose and discuss certain non-GAAP financial measures in our public filings and earning releases. Currently, the non-GAAP financial measures that we disclose are Adjusted EBITDA, which is our income from continuing operations before interest, income taxes, amortization of acquired contract liabilities, legal settlements, depreciation and amortization; and Adjusted EBITDAP, which is Adjusted EBITDA, before pension. We disclose Adjusted EBITDA on a consolidated and Adjusted EBITDAP on a consolidated and a reportable segment basis in our earnings releases, investor conference calls and filings with the SEC. The non-GAAP financial measures that we use may not be comparable to similarly titled measures reported by other companies. Also, in the future, we may disclose different non-GAAP financial measures in order to help our investors more meaningfully evaluate and compare our future results of operations with our previously reported results of operations.

We view Adjusted EBITDA and Adjusted EBITDAP as operating performance measures and, as such, we believe that the U.S. GAAP financial measure most directly comparable to it is net income. In calculating Adjusted EBITDA and Adjusted EBITDAP, we exclude from net income (loss) the financial items that we believe should be separately identified to provide additional analysis of the financial components of the day-to-day operation of our business. We have outlined below the type and scope of these exclusions and the material limitations on the use of these non-GAAP financial measures as a result of these exclusions. Adjusted EBITDA and Adjusted EBITDAP are not measurements of financial performance under U.S. GAAP and should not be considered as a measure of liquidity, as an alternative to net income (loss), income from continuing operations, or as an indicator of any other measure of performance derived in accordance with U.S. GAAP. Investors and potential investors in our securities should not rely on Adjusted EBITDA or Adjusted EBITDAP as a substitute for any U.S. GAAP financial measure, including net income (loss) or income from continuing operations. In addition, we urge investors and potential investors in our securities to carefully review the reconciliation of Adjusted EBITDA and Adjusted EBITDAP to net income (loss) set forth below, in our earnings releases and in other filings with the SEC and to carefully review the U.S. GAAP financial information included as part of our Quarterly Reports on Form 10-Q and our Annual Reports on Form 10-K that are filed with the SEC, as well as our quarterly earnings releases, and compare the U.S. GAAP financial information with our Adjusted EBITDA and Adjusted EBITDAP.Adjusted EBITDA and Adjusted EBITDAP are used by management to internally measure our operating and management performance and by investors as a supplemental financial measure to evaluate the performance of our business that, when viewed with our U.S. GAAP results and the accompanying reconciliation, we believe provides additional information that is useful to gain an understanding of the factors and trends affecting our business. We have spent more than 20 years expanding our product and service capabilities, partially through acquisitions of complementary businesses. Due to the expansion of our operations, which included acquisitions, our income from continuing operations has included significant charges for depreciation and amortization. Adjusted EBITDA and Adjusted EBITDAP exclude these charges and provides meaningful information about the operating performance of our business, apart from charges for depreciation and amortization. We believethe disclosure of Adjusted EBITDA and Adjusted EBITDAP helps investors meaningfully evaluate and compare our performance from quarter to quarter and from year to year. We also believe Adjusted EBITDA and Adjusted EBITDAP are measures of our ongoing operating performance because the isolation of non-cash charges, such as depreciation and amortization, and non-operating items, such as interest, income taxes, pension and other postretirement benefits, provides additional information about our cost structure and, over time, helps track our operating progress. In addition, investors,securities analysts and others have regularly relied on Adjusted EBITDA and Adjusted EBITDAP to provide financial measures by which to compare our operating performance against that of other companies in our industry.


Non-GAAP Disclosure

Set forth below are descriptions of the financial items that have been excluded from our net income to calculate Adjusted EBITDA and Adjusted EBITDAP and the material limitations associated with using these non-GAAP financial measures as compared to net income (loss) or income from continuing operations:• Divestitures may be useful for investors to consider because they reflect gains or losses from sale of operating units. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations.• Legal settlements may be useful for investors to consider because it reflects gains or losses from disputes with third parties. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations.• Non-service defined benefit income from our pension and other postretirement benefit plans (inclusive of the adoption of ASU 2017-07) may be useful for investors to consider because they represent the cost of post retirement benefits to plan participants, net of the assumption of returns on the plan's assets and are not indicative of the cash paid for such benefits. We do not believe these earnings (expenses) necessarily reflect the current and ongoing cash earnings related to our operations.• Amortization of acquired contract liabilities may be useful for investors to consider because it represents the non-cash earnings on the fair value of off-market contracts acquired through acquisitions. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations.• Amortization expense (including intangible asset impairments) may be useful for investors to consider because it represents the estimated attrition of our acquired customer base and the diminishing value of product rights and licenses. We do not believe these charges necessarily reflect the current and ongoing cash charges related to ouroperating cost structure. • Depreciation may be useful for investors to consider because it generally represents the wear and tear on our property and equipment used in our operations. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.• The amount of interest expense and other we incur may be useful for investors to consider and may result in current cash inflows or outflows. However, we do not consider the amount of interest expense and other to be a representative component of the day-to-day operating performance of our business.• Income tax expense may be useful for investors to consider because it generally represents the taxes which may be payable for the period and the change in deferred income taxes during the period and may reduce the amount of funds otherwise available for use in our business. However, we do not consider the amount of income tax expense to be a representative component of the day-to-day operating performance of our business.

Management compensates for the above-described limitations of using non-GAAP measures only to supplement our U.S. GAAP results and to provide additional information that is useful to gain an understanding of the factors and trends affecting our business.

The unaudited pro forma condensed financial data for the fiscal year ended March 31, 2019 assumes that the completed transition of the Global 7500 Program, as well as the combined effect of the fiscal 2019 divestitures all took place on April 1, 2018. Triumph’s unaudited consolidated statements of operations for the fiscal year ended March 31, 2019 have been adjusted to remove the financial results of the Global 7500 Program, as well as the combined financial results of the fiscal 2019 divestitures.


Non-GAAP Disclosure

Fiscal year ended Fiscal year ended Fiscal year ended

March 31, 2019 Completed March 31, 2019 Non-core March 31, 2019

($ in millions) (Unaudited) Divestitures Pro Forma Operations Core Operations

Integrated Systems 1,043$ -$ 1,043$ -$ 1,043$

Aerospace Structures 2,062 529 1,533 1,214 319

Product Support 284 31 253 - 253

Eliminations (24) - (24) - (24)

Net Sales 3,365 560 2,805 1,214 1,591

Integrated Systems 158$ -$ 158$ -$ 158$

Aerospace Structures (152) (92) (60) (96) 35


Corporate (323) (235) (88) - (88)

Operating Income (275) (325) 51 (96) 146


Aerospace Structures 111 18 94 82 11


Corporate 3 - 3 - 3

Depreciation & Amortization 150 19 131 82 48

Integrated Systems (34)$ -$ (34)$ -$ (34)$

Aerospace Structures (33) - (33) (33) -

Amortization of acquired contract liabilities (67) - (67) (33) (34)

Other EBITDAP Adjustments

Loss on divestitures (1) 235$ 235$ -$ -$ -$

Adoption of ASU 2017-07 (2) 87 18 70 70 -


Aerospace Structures 13 (57) 70 23 47


Corporate (85) - (85) - (85)

Adjusted EBITDAP 130 (53) 184 23 161

Cash flow used in (provided by) operations (174)$ (234)$ 60$ (64)$ 124$

Capital expenditures (47) (3) (44) (24) (20)

Free cash flow (use) (221)$ (237)$ 16$ (87)$ 104$

Notes>

All amounts are unaudited

(1) Adjustment included in Corporate results

(2) Adjustment included in Aerospace Structures results

Investor Overview February 2020 · military aircraft for OEMs and operators ... Source: 2019 Oliver...

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