Why Is Triumph Group (TGI) Up 3% Since Last Earnings Report?
It has been about a month since the last earnings report for Triumph Group (TGI). Shares have added about 3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Triumph Group due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Triumph Group Beats Q1 Sales Estimates, Reports Loss
Triumph Group reported a first-quarter fiscal 2024 (ended Jun 30, 2023) adjusted loss of 10 cents per share, which came in wider than the Zacks Consensus Estimate of a loss of 5 cents per share. The bottom line declined massively from earnings of 12 cents reported in the prior-year quarter.
Including one-time adjustments, TGI reported a GAAP loss of 19 cents per share in the first quarter of fiscal 2024 compared with 16 cents in the prior-year quarter.
Total Sales
Triumph Group’s net sales in the quarter under review were $327.1 million, which beat the Zacks Consensus Estimate of $324 million by 0.9%. However, the top line declined 6.4% from $349.4 million in the year-ago quarter.
Excluding divestitures and exited programs, organic sales in the quarter were up 14% year over year. The rise was driven by increases in commercial OEM sales, an improvement in commercial aftermarket sales and recovering military OEM sales.
Operational Highlights
In the first quarter of fiscal 2024, Triumph Group generated an adjusted operating income of $24.4 million, which decreased 25.2% from the year-ago reported figure.
Interest expenses and others amounted to $38.5 million, up 20.5% from the prior-year quarter.
Triumph Group’s backlog was $1.74 billion, up 10% from the prior fiscal year-end, primarily on commercial narrowbody platforms.
Segmental Performance
Interiors: The segment’s sales totaled $36.6 million, down 61.4% from $94.8 million in the year-ago quarter. The segment reported an operating income of $2.6 million in the first quarter of fiscal 2024.
Systems & Support: The segment’s sales improved 14.1% year over year to $290.6 million. The operating income was $45.8 million in the first quarter of fiscal 2024.
Financial Position
As of Jun 30, 2023, TGI’s cash and cash equivalents totaled $146.3 million compared with $227.4 million as of Mar 31, 2023.
Its long-term debt (excluding the current portion) amounted to $1.68 billion as of Jun 30, 2023, down from $1.69 billion as of Mar 31, 2023.
The net cash outflow from operating activities as of Jun 30, 2023 was $63.7 million compared with a net cash outflow of $93 million in the year-ago period.
Triumph Group’s capital expenditures were $6.4 million as of Jun 30, 2023 compared with $3 million in the prior year.
Guidance
Triumph Group initiated its financial guidance for fiscal 2024. It expects to generate net sales in the range of $1.39-$1.43 billion. The Zacks Consensus Estimate for revenues is pegged at $1.43 billion, toward the high end of the company’s guided range.
TGI expects cash used in operations in the range of $60-$80 million in fiscal 2024. Free cash flow is anticipated in the band of $35-$50 million for fiscal 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -40% due to these changes.
VGM Scores
Currently, Triumph Group has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Triumph Group has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Triumph Group is part of the Zacks Aerospace - Defense Equipment industry. Over the past month, Hexcel (HXL), a stock from the same industry, has gained 7.8%. The company reported its results for the quarter ended June 2023 more than a month ago.
Hexcel reported revenues of $454.3 million in the last reported quarter, representing a year-over-year change of +15.6%. EPS of $0.50 for the same period compares with $0.33 a year ago.
For the current quarter, Hexcel is expected to post earnings of $0.42 per share, indicating a change of +27.3% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.3% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Hexcel. Also, the stock has a VGM Score of C.
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Triumph Group, Inc. (TGI) : Free Stock Analysis Report
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