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Triumph Group (TGI) Q3 Earnings Beat, Revenues Lag Estimates

Zacks Equity Research

Triumph Group Inc.’s TGI adjusted earnings from continuing operations in third-quarter fiscal 2019 (ended Dec 31, 2018) came in at 42 cents per share, which surpassed the Zacks Consensus Estimate of 38 cents by 10.5%. However, the reported figure declined 44.7% from 76 cents per share registered in the prior-year quarter.

Including one-time adjustments, the company incurred GAAP loss of 62 cents compared with $2.29 a year ago.

Total Sales

Net revenues of $807.9 million lagged the Zacks Consensus Estimate of $822 million by 1.7% but improved 4.2% year over year.

Organic sales in the quarter improved 7% year over year driven by  increased shipments for narrow body programs such as the 737, 787 and A320, military platforms, aftermarket accessory services and development programs transitioning to production.

Triumph Group, Inc. Price, Consensus and EPS Surprise

Triumph Group, Inc. Price, Consensus and EPS Surprise | Triumph Group, Inc. Quote

Operational Highlights

In third-quarter fiscal 2019, the company’s operating loss was $16.9 million narrower than $154.2 million in the year-ago quarter.

Interest expenses and other amounted to $29.3 million compared with $25.8 million in the prior-year quarter.

Backlog was $4.3 billion, in line with the prior-year period’s figure.

Segmental Performance

Aerospace Structures: Segment sales totaled $490.3 million, up 3.6% from $473.3 million in the year-ago quarter. Operating loss was $49.8 million, narrower than $193.2 million in the same period last year.

Integrated Systems: Segment sales rose 5.5% year over year to $252.4 million. Operating income summed $39.9 million, down 5.4% from the year-ago level of $42.2 million.

Product Support: Segment sales improved 5% year over year to $71.4 million in the reported quarter. Operating income amounted to $11.4 million compared with the year-ago figure of $12.4 million.

Financial Position

As of Dec 31, 2018, Triumph Group’s cash and cash equivalents were $28.7 million compared with $35.8 million on Mar 31, 2018. Its long-term debt (excluding current portion) amounted to $1.62 billion as of Dec 31, 2018, compared with $1.42 billion on Mar 31, 2018.

Cash used in operating activities in the first nine months of fiscal 2019 was $193.1 million compared with $198.3 million in the corresponding period of fiscal 2018. The company spent $34.8 million as capital expenditures in the first nine months of the fiscal year compared with $31.9 million in the prior-year period.

Guidance

Triumph Group reaffirmed its fiscal 2019 guidance. Based on anticipated aircraft production rates and divestitures completed in fiscal 2018, the company continues to anticipate its revenues in the range of $3.3-$3.4 billion.

On the bottom-line front, the company continues to expect its adjusted earnings per share in the $1.50-$2.10 band.

Zacks Rank & Stock to Consider

Triumph Group currently has a Zacks Rank #4 (Sell).

A better-ranked stock in the same space is Spirit AeroSystems Holdings, Inc. SPR, which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Spirit AeroSystems delivered a positive earnings surprise of 3.93% in the last reported quarter. The Zacks Consensus Estimate for 2019 earnings has moved 1.9% north over the past 60 days.

Recent Defense Releases

TransDigm Group Incorporated TDG reported first-quarter fiscal 2019 adjusted earnings of $3.85 per share, which surpassed the Zacks Consensus Estimate of $3.35 by 14.9%.

Raytheon Company RTN reported fourth-quarter 2018 earnings per share (EPS) of $2.93 from continuing operations, outpacing the Zacks Consensus Estimate of $2.89 by 1.4%. The bottom-line figure also improved a massive 117% from the year-ago quarter’s figure of $1.35.

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