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Triumph Amends Credit Agreement

Zacks Equity Research

Triumph Group Inc. (TGI) announced amendment to its existing revolving credit agreement. The amendment increased the size of the revolving credit while extending the maturity period to five years with a modified fee structure.

The increase in size of the company’s secured revolving credit facility from $850 million to $1 billion along with a $50 million accordion feature was quite significant. Moreover, the maturity term for the facility was extended through May 23, 2017.

Triumph’s Chairman and Chief Executive Officer, Richard C. Ill, was pleased with the favorable pricing grid, which resulted from the amendment. He opined that the new agreement will create immediate savings and help in easy execution of business with increased credit size and extended term.

With support from the bank group and the company’s lead bank, PNC, for the longer term, Triumph will now be able to invest more into its ongoing business for internal growth initiatives and pursue future acquisitions as well.

Recently, the company posted fourth-quarter 2011 results with net sales increasing 3% year over year to $946.4 million and organic growth reaching 3% as well. EBITDA jumped 27.1% year over year to $165.3 million in the reported quarter while EBIDTA margin rose to 17.5% from 14.2% a year ago. Moreover, strong backlog during the quarter coupled with a solid balance sheet was quite impressive.

Based in Wayne, Pennsylvania, Triumph Group offers a variety of products and services to the aerospace industry, serving commercial and regional airlines, air cargo carriers, as well as OEMs of commercial, regional, business and military aircrafts. It faces stiff competition from its peers, such as AAR Corp. (AIR) and Goodrich Corp. (GR).                               

We currently maintain a long-term ‘Neutral’ recommendation on the stock. Moreover, Triumph Group has a Zacks #2 Rank, which translates into a short-term (1-3 months) ‘Buy’ rating.

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